Infosys missed market estimates to report a modest 3.5 per cent increase in net profit as India’s second-largest software service exporter faced pricing pressures due to increasing commoditisation of its traditional outsourcing business.

The Bengaluru-based company reported a profit of ₹3,097 crore for the fourth quarter ended March 31, 2015, compared with ₹ 2,992 crore in the corresponding quarter last year.

“A rewarding year but a disappointing quarter,” said Vishal Sikka, CEO and Managing Director, Infosys, describing the company’s performance. For the financial year ending March 2016, Infosys expects revenue to grow 10-12 per cent in constant currency terms, and 6.2-8.2 per cent in dollar terms.

For the full year ended March 31, 2015, the software major reported a 16 per cent increase in net profit to ₹12,329 crore (₹10,648 crore) on a 6 per cent increase in revenue to ₹53,319 crore (₹50,133 crore). Revenue from BFSI (banking, financial services and insurance), retail and life sciences declined while contributions from manufacturing and energy, utilities, communications and services went up.

Infosys also announced that it has acquired US-based digital e-commerce services provider Kallidus for $120 million. This is Infosys’ second acquisition this year. Kallidus delivers a cloud-hosted platform for mobile websites, apps, and other digital shopping experiences. Commenting on the results, Dipen Shah, Head of Private Client Group Research, Kotak Securities, said the long-term strategic plan reflects Infosys’ focus on next-generation services and delivery models.

Infosys shares on the Bombay Stock Exchange fell nearly 6 per cent to close at ₹ 1,996.

Bonus shares To calm investors, the board in its meeting today recommended a bonus issue of 1:1 share held and a stock dividend of 1:1 ADS held.

The company’s current policy is to pay dividends of up to 40 per cent of post-tax profits. However, the board has decided to increase the dividend payout to up to 50 per cent post-tax profits effective fiscal 2015. The board recommended a final dividend of ₹29.50 per share for fiscal 2015 (equivalent to ₹14.75 per share effective after 1:1 bonus issue, if approved by shareholders).

Infosys’ gross employee addition was over 50,000 for the year. The quarterly annualised attrition for Infosys declined to 13.4 per cent in the fourth quarter compared with 23.4 per cent in the first quarter.

Sikka told analysts that initiatives focused on employee engagement over the past few months, including bonus payment, have resulted in containing employee attrition to one of the lowest levels in recent times.

Last week, Tata Consultancy Services had reported a 30.7 per cent fall in net profit for the fourth quarter to ₹3,713 crore. Wipro and HCL Tech had also seen muted numbers.

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