Infosys Q4 net grows marginally to Rs 3,603 crore

Though India’s second largest IT company Infosys on Thursday reported a muted growth of 0.2% in its net profit at Rs 3,603 crore for the fourth quarter ended March 31, the company announced that it will pay up to Rs 13,000 crore to shareholders during the current financial year through dividend and/or share buyback.

The company’s net profit reached Rs 3,597 crore in the same period last year. While on a sequential basis, the net profit declined 2.8% compared with Rs 3,708 crore for the third quarter ending fiscal 2017. On an yearly basis, the net profit registered a growth of 6.4%, compared with Rs 13,491 crore in the FY2016.

The dampening result slipped the company’s stock 4.14% to Rs 968 from Rs 1,010, as of December 31, 2016. The company has recommended a final dividend of Rs 14.75 per share for 2016-17.

According to analysts, while Infosys will grow faster than both TCS and Wipro, its growth is slower than the 8.7% growth reported by Cognizant in 2016.

Interacting with media, Infosys CEO Vishal Sikka said that unanticipated execution challenges and distractions in a seasonally soft quarter affected the company’s overall performance.

“At the same time, we continued to see many positive signs of our strategy execution. Our software-led offerings continued to show strong momentum and client success, with continued adoption of Mana, our AI platform. Our employee engagement continued to drive down attrition, especially with top performers,” he said.

The company’s total income registered a growth of 3.4% at Rs 17,120 crore for the fourth quarter under review, compared with Rs 16,550 crore for the same period of last year. While on sequential basis, it grew only 0.9% from Rs 17,273 crore, and on annual basis 9.7% at Rs 62,441 crore in FY2016.

On the guidance front, the company said that its revenues are expected to grow 2.5%, to 4.5% in Indian rupee terms, for year ended March 31, 2018, based on the exchange rates as of March 31, 2017.

The company estimates its EBIT (earnings before interest and tax) margin to be between 23% and 25% in financial year 2018, lower than the 24-26% band maintained over the last few years. This suggests that the company is seeing pricing pressure for commoditised deals.

“I think that the role of visas in our industry has become too strong in the last 15 years and we need to focus on delivering value, independent of visas,” Sikka said on the visa issue.

On the attrition front, Infosys witnessed 8,529 employees leaving the organisation in the fourth quarter, compared with 8,373 in the same period in FY2016. The net addition of employees during the quarter was 601, while in March 2016, it was 661. The company won a total of $806-million deals for the quarter, and $8.4-billion for the entire fiscal.

DH News Service

Commenting on the results, Aston Business School, UK, Doctoral Research Scholar Sanjoy Sen said the current Infosys results reconfirm the combined impact of the environmental uncertainty created by factors such as the initiation of Brexit implementation in Europe, and the ongoing unpredictability on policy matters including immigration by the new US administration.

“Apart from what Infosys describes as ‘unforeseen execution challenges’, the slowdown in IT budgets as a result of this global uncertainty is demonstrated by the slowdown in growth in key IT-intensive sectors such as BFSI,” said Sen.