Infosys Q4 profit up 17.5%, announces Rs 9,200 cr share buyback

Infosys on Wednesday posted a 17.5 per cent rise in net profit at Rs 5,076 crore for the March 2021 quarter over the year-ago period buoyed by large deal wins, and announced an up to Rs 9,200 crore buyback programme at a maximum price of Rs 1,750 per share.Infosys expects FY22 revenue to grow 12-14 per cent in constant currency, backed by good, broad-based demand across industries.

Infosys on Wednesday posted a 17.5 per cent rise in net profit at Rs 5,076 crore for the March 2021 quarter over the year-ago period buoyed by large deal wins, and announced an up to Rs 9,200 crore buyback programme at a maximum price of Rs 1,750 per share.

Infosys expects FY22 revenue to grow 12-14 per cent in constant currency, backed by good, broad-based demand across industries. The country's second largest software services major's net profit (after minority interest) was at Rs 4,321 crore in the January-March 2020 quarter. Its revenue grew 13.1 per cent to Rs 26,311 crore year-on-year from Rs 23,267 crore. ''Its been an exceptional year and exceptional quarter. Our year-on-year constant currency (CC) growth was at 9.6 per cent for Q4 and for the full-year our growth was 5 per cent in CC. Digital business grew by 34 per cent y-o-y in Q4 and now represents 51.5 per cent of our overall revenue,'' Infosys CEO Salil Parekh told reporters.

He added that Infosys' large deal wins were at USD 14 billion for the full year, a growth of 57 per cent over the previous financial year.

''It (large deal wins) was USD 2.1 billion for Q4. Within the full year large deals, (about) 66 per cent were net new, helping us to set up a very strong foundation for the next financial year,'' he said.

Infosys' FY21 net profit was up 16.6 per cent to Rs 19,351 crore, while revenue was higher by 10.7 per cent to Rs 1,00,472 crore compared to the previous fiscal. ''The guidance of 12-14 per cent growth is an extremely strong guidance and indication that we see very good demand and we also see this coming across from a strong foundation from what was achieved in previous financial year,'' Parekh said.

He added that ''demand is coming in a broad-based way from almost all our industries'', providing a good outlook for demand.

The board has recommended capital return of Rs 15,600 crore, including final dividend of Rs 6,400 crore and open market buyback of shares of Rs 9,200 crore. It has recommended a final dividend of Rs 15 per equity share for the financial year ended March 31, 2021.

FY21 was a landmark year with superior shareholder returns backed by robust operating metrics and strong growth across revenue, margins and free cash flows, Infosys CFO Nilanjan Roy said.

''We've declared Rs 6,400 crore of dividend and Rs 9,200 crore in buyback. Our cumulative payout for FY21 and FY20, which are the first two years of the capital allocation policy, we would have paid out 83 per cent of the 85 per cent. So in that sense, I think this is completely in line with our policy and that's what the board also considered when deciding the amount of buyback,'' Roy said. From FY20, the Bengaluru-based company had enhanced its capital allocation plan and had said it will return 85 per cent of free cash flow cumulatively over a five-year period via buyback and dividends.

Trading was closed on Wednesday. Shares of Infosys had closed at Rs 1,398.60 apiece, down 1.91 per cent on Tuesday on the BSE. The buyback price offered is over 25 per cent higher than Tuesday's closing price.

Earlier this week, larger rival Tata Consultancy Services had announced a 14.9 per cent rise in consolidated net profit to Rs 9,246 crore, and 9.4 per cent jump in March quarter revenue to Rs 43,705 crore from the year-ago period.

Cross-town rival Wipro is slated to announce its fourth quarter and FY21 financial results on Thursday. ''Infosys has managed to navigate through the crisis and has been comparatively more competent among some Indian peers to convert the threat into an opportunity to drive digital growth. Though overall yearly revenue remains under pressure, this is not unexpected due to the COVID situation unfolding last year,'' Gartner Senior Research Director DD Mishra said.

He added that as the newer deals require more non-linear modes of engagement with providers, Infosys may need to accelerate its capability towards more agile contracts.

At the end of March 2021, Infosys' headcount stood at 2,59,619 people with voluntary attrition at 15.2 per cent. ''We did one salary hike effective January, the quantum was similar to what we have done historically...we will launch a compensation review in July....this year (FY21), we have hired 36,500 people, out of which about 21,000 were freshers,'' Infosys COO Pravin Rao said.

The company is looking at hiring 25,000 people this year from both India and overseas, he added. ''Despite the disruptions, we continue to execute seamlessly with broad-based momentum across verticals. This has led to healthy volume growth and record utilisation in a seasonally soft quarter...While our employees continue to work from home through this health crisis, we remain focused on their wellness, including facilitating vaccination rollout for eligible employees,'' Rao said.

He added that attrition has picked up, largely reflecting a strong demand environment, but expressed confidence in employee engagement initiatives, vast talent pool and training capabilities to ensure seamless execution. Infosys has also set up an Environmental Social and Governance Committee of the Board (ESG Committee) with effect from April 14, 2021. Independent Directors of the Infosys Board - Chitra Nayak and Uri Levine - have been appointed as members of the ESG Committee, with Kiran Mazumdar-Shaw, Lead Independent Director of the Infosys Board appointed as Chair of the ESG Committee, a regulatory filing said. The ESG Committee will meet periodically and guide the Board in discharging its oversight responsibility on matters related to organization-wide ESG initiatives, priorities, and leading ESG practices, it added.

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