Bangalore Infosys Ltd. forecasts 13-15% revenue growth for the current fiscal amid a strong deal pipeline and continued demand for digital and cloud computing services. However, its March quarter earnings missed analysts’ estimates as wage costs went up.
BNP Paribas Sharekhan analyst Ashish Das said the revenue growth forecast is higher than our estimates. He said the forecast is also higher than the Bengaluru-based company’s initial 12-14% forecast for the year ended March. Net profit up 12% 5,686 crore for the quarter ended March 5,076 crore in the year-ago period, behind Bloomberg’s consensus estimate 5,961 crore.
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Revenue up 22.7% 32,276 crore for the March quarter from 26,311 crore in the year-ago period on broad-based growth across business segments, service lines and markets. Revenue was in line with analysts’ estimates 32,709 crores.
India’s technology workers are demanding a massive increase and switching of jobs at a record pace as demand for skilled workers to work on digital, cloud computing and cyber security projects in the aftermath of the pandemic. With the rise in inflation, the cost of wages is also increasing.
Operating margin for the March quarter declined to 21.5% from 24.5% in the year-ago period as employee and compensation costs dented profits. The company’s operating margin stood at 23.5% in the December quarter. Infosys expects its operating margin to be in the range of 21-23% for FY13.
But the demand environment for software services companies remained strong.
A closely watched dollar revenue rose 20.6% year over year to $4.28 billion in constant currency on the back of a big deal win of $2.3 billion. For FY22, Infosys delivered revenue of $16.3 billion, growing 19.7% in constant currency, the fastest in 11 years. “Infosys has delivered the highest annual growth in a decade, with comprehensive performance driven by widely differentiated digital and Infosys Cobalt-led cloud capabilities, driven by the ‘One Infosys’ approach. Chief Executive and Managing Director Salil Parekh “We continue to gain market share as a result of continued customer confidence in our ability to successfully navigate their digital journey,” said. Partner with us as they transform, adapt and thrive.”
The company’s digital revenue grew 38.8% in constant currency to $2.53 billion and contributed 59.2% to total revenue in the March quarter.
Revenue from financial services grew 14.1% year over year in constant currency and contributed 31.3% to total revenue for the March quarter. Revenue from retail grew by 16.5 per cent, accounting for 14.3% of revenue in the March quarter. Financial services and retail account for nearly half of Infosys’ revenue.
However, employee turnover remains a significant operational challenge. The attrition rate rose to 27.7% from 15.2% a year ago and 25.5% in the December quarter. “Attrition rates are comparatively higher than benchmarks, which is a concern,” said analyst DD Mishra, senior director at Gartner. The company had hired 85,000 freshers last fiscal and about 50,000 in FY23. The plan is to hire college graduates.The total number of employees was at 314,015 as on 31st March 2022.