Infosys net profit rises 6% in Q4

Infosys posted a 6.1 per cent increase in net profit to ₹4,321 crore during Q4 on a year-on-year basis largely because of lower taxes, but missed street estimates.

The IT giant also did not give any guidance for the year, stating that there was business uncertainty emanating from Covid-19. “The company will provide guidance after visibility improves,” it said. Infosys is the second IT company to suspend guidance after Wipro.

The company’s revenues for the quarter grew 8 per cent to ₹23,267 crore. On a sequential basis, net profit was down 3.1 per cent while revenues grew 0.8 per cent. Margin narrowed 70 basis points to 21.2 per cent. The company said going forward, there may be pressure on the margin in the near term.

“The impact caused by Covid-19 since last few weeks of March has led to significant displacement in the operating model while severely testing business continuity plans of companies,” COO UB Pravin Rao told a news conference on Monday.

He said the company plans to hire 35,000 people during the year. He also said all campus and lateral hirings will be honoured even though increments and promotions have been frozen for now. He also said there will be no Covid-19 layoffs.

With regard to the investigations being carried out by the US Securities & Exchange Commission and SEBI, Infosys CEO and MD Salil Parekh said the company is unable to predict the scope, duration or the outcome of investigations related to a whistleblower’s complaints.

Parekh said all the top executives are working very closely with the clients, spending more time with them and engaging with them to address the challenges that they are facing. He said the company had an exceptional year in FY20 with a growth of 9.8 per cent and an operating margin of 21.3 per cent. “While the immediate short term will be challenging, looking ahead, we can see that there is a strong interest to consolidate with partners with high-quality and agile service delivery and strong financial resilience. I am confident we will emerge from this stronger,” he added.

CFO Nilanjan Roy, said the company gained 2 per cent because of the rupee depreciation with a 50 basis point margin benefit. He said the company expects to spend less Capex than the previous year’s $450 million. The company had cash of $3.6 billion with no debt on the balance sheet. The company announced a final dividend of ₹9.50 per share.

The company also announced the appointment of Uri Levine as an independent director, replacing DN Prahlad who resigned from the board.

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