Infosys Q1 net profit grows 3.2% to ₹5,360 cr, revenue up 23.6%

Indian IT major Infosys reported 3.2% growth in its consolidated net profit for the quarter ended June 2022 as revenue from operations surged. The company posted a net profit of ₹5,360 crore during the quarter under review, as compared to ₹5,195 crore in the year-ago period, shows an exchange filing.

“We had an excellent start to the financial year with 5.5% sequential growth and 21.4% y-o-y growth in constant currency terms. We continue to gain market share with our cloud capabilities and differentiated digital value proposition for our clients. Growth continues to be broad based across geographies and business segments,” states CEO Salil Parekh during a post-results interaction.

Infosys saw its revenue from operations grow 23.6% to ₹34,470 crore in Q1 FY23, as opposed to ₹27,896 crore in Q1 FY22. Total income, net of other income, increased to ₹676 crore during the period from ₹622 crore, marking a growth of 8.7%.

Total operating expenses of the company also increased during the period under review, growing 14.4% to ₹3,187 crore in June quarter of current fiscal to ₹2,787 crore in the corresponding period of last fiscal.

Operating profit increased 4.7% in the quarter to ₹6,914 crore from ₹6,603 crore a year ago. Meanwhile, operating margin declined 3.6% year-on-year, falling to 20.1% from 23.7%.

Financial services remained the most prominent business segment for Infosys, accounting for 30.6% of the revenues, followed by retail (14.5%), communication (13%), energy, utilities, resources and services (12.4%), manufacturing (12.1%), hi-tech (8.2%), and life sciences (6.5%).

Digital revenues made up 61% of the company’s total revenue in Q1 FY23. The large deals had 19 large deals, with a combined value of $1.69 billion during the quarter. Half of these large deals were net new, informs the Infosys CEO.

“The pipeline for large deals is larger than what we had in the last three and six months. So, the demand outlook is good. Of course, the environment is different, there is talk of recession... there is an increase in interest rates. There are some pockets where we see... there are pockets where we see some of this impact coming in... But the view for us today, given what we are seeing in our pipeline, the overall pipeline is strong at this stage. But of course, we are watching out for what can happen as the environment evolves and changes,” avers Parekh.

North America remains the biggest market for the company, accounting for 61.8% of revenues. Europe and the rest of the world represented 25% and 10.6%, respectively. India accounted for 2.6% of the company’s revenues in the June quarter.

“The view we have today is that we see our Q1 was very strong. We are not seeing the impact across the board. Each of our sectors have grown well and many of them over 20-25%. Geographies have done well. We feel that at this stage there is the confidence to increase our growth guidance,” says the Infosys CEO.

Infosys closed the quarter with 1,778 clients, compared with 1,659 clients in the year-ago period. The company added 106 clients during the quarter. The number of customers in the more than $100 million basket remained sequentially flat at 38, growing from 34 in the year-ago period. The number of clients in more than $50 million basket increased to 69 from 59 a year ago.

The top five clients contributed 13% to the revenue, up from 11.3%. The contribution to revenue by top 10 clients also increased, rising to 20.8% from 18.8%.

The workforce at Infosys at the end of June quarter comprised 3,35,186 employees, as compared with 2,67,953 employees. Voluntary attrition rate (LTM-IT services) stood at 28.4%, against 27.7% in the previous quarter and 13.9% in the corresponding quarter of the last fiscal.

“With a strong growth in Q1 and our current outlook on demand opportunity and pipeline, we increased our revenue growth guidance, which was at 13-15%, now to 14-16% growth for this year,” Parekh says.