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Infosys announced their first-quarter results of FY22. The company recorded its fastest growth in the first quarter of a financial year in a decade. The country’s second-largest IT services company clocked a 22.7% y-o-y rise in the Q1 net profit from Rs 4,233 crore to Rs 5,195 crore.

The company’s revenue saw a growth of 6% over the previous quarter on account of a boom in the digital services sector in the pandemic era. The digital revenue now accounts for 53.9% of Infosys’ business compared with 44.5% in Q1 FY21. The company now estimates its full-year revenue growth in constant currency terms to come in at 14-16%.

The Infosys stock lifted by 0.20% to Rs 1,579.85 intra-day on Thursday, July 15, after its Q1 performance. In fact, a slew of IT stocks surged on Dalal Street amid a strong market sentiment led by Infosys results.

Infosys Q1 FY22 – Hits

  • Revenue grew by 6% from Rs 26,311 crore in the last quarter (Q4 21) to Rs 27,896 crore in Q1 FY22.
  • In y-o-y terms, revenue jumped by 17.9% from Rs 23,665 crore to Rs 27,896 crore y-o-y.
  • The IT firm reported a 22.7% rise in net profit y-o-y, bringing it to Rs 5,195 crore in the June quarter from Rs 4,233 crore in the year-ago period.
  • The company’s operating margin has increased by 1% to 23.7% since the last financial year.
  • Infosys’ gross profit rose by 17.9% to Rs 9,390 y-o-y.
  • Other income up from Rs 427 crore to Rs 573 y-o-y.
  • 1/3rd of the company’s business was on account of its financial services segment.
  • North American businesses contributed 61.7% to the company’s total revenue. 
  • The IT giant signed deals worth $2.6 billion in this quarter.

Misses

  • Infosys’ Communication, Energy, Utilities, Resources & Services sector took a hit on a y-o-y basis.
  • The increase in the company’s global and Indian business was marginal.
  • The profit margin was hit due to salary hikes, new talent & acquisition. Margin guidance for the full year, however, is retained at 22-24%.

The company seems to have had a stellar quarterly performance with barely any mentionable negatives.

Company Statement

Company CEO and MD Salil Parikh lauded Infosys employees for a landmark performance in a decade and reiterated the company’s stance of its commitment to the client. Mr. Parikh expresses confidence in the company’s performance with Infosys now revising the revenue growth guidance to 14-16% from the previous 12-14%. Infosys COO Pravin Rao highlighted the rising demand for digital talent announcing the expansion of the company’s hiring program. 

Liabilities

The company’s total liabilities jumped from Rs 31,604 crore in the last quarter to Rs 37,173.

Infosys in News

  • The company will hire 35,000 freshers globally this year.
  • The IT giant will now help the French Tennis Federation transform the tennis ecosystem for remote fans.
  • Infosys has announced that their ‘single largest priority will be resolving the issues in the new income tax portal.
  • ArcelorMittal has signed Infosys for application management and business process management services in Europe.
  • ArchRock- a natural gas compression equipment provider has selected Infosys to integrate digital technologies and mobile tools for its field service technicians.

What this means for the investors

Despite the net profits falling short of estimates, analysts are positive after the revenue guidance was hiked. On the back of increased demand for digital platforms and services, analysts remain bullish after the Q1 results of the company. Analysts express confidence in the company’s digital capability and it remains a top pick in the IT sector. 

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