Infosys Q2 net profit jumps 11%; dividend declared, guidance raised

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Infosys July-Sep 22 earnings

Infosys reported its Q2 earnings on Thursday evening. The net profit was above analysts’ expectations. The share price of Infosys closed 0.47% lower on Thursday at Rs 1422.0 before the earnings.

Below are key highlights from its Q2FY23 results:

Profit rises: Infosys, India's second-largest IT firm, reported an 11.1% on-year rise in consolidated profit to Rs 6,021 crore above street estimates. Analysts had an estimated profit of Rs 5,934 crore. In the same period last year, the company reported a net profit of Rs 5,421 crore. On a sequential basis, the profit increased by 12.3% from Rs 5,360. 

Revenue growth: The consolidated revenue from the operations jumped to Rs 36,538 crore, up nearly 23.4% on the year and 6.0% from the previous quarter. Analysts had estimated revenue growth of 24%. 

Infosys’ digital revenue was 61.8% of total revenues. Among verticals, manufacturing, communication, life science, and financial services posted robust year-on-year growth in sales. Geographically, North America reported 15% on-year growth, Europe 24.7% growth, and India saw muted growth of 2.9% from the year-ago quarter.

Margins: The company said that cost optimization helped margins to improve by 90 bps while currency tailwinds by 60 bps. Infosys' operating margin for the September quarter improved to 21.5% from 20.1% quarter-on-quarter (QoQ).

Guidance: Infosys has revised its margin guidance for FY23 between 21% and 22% and has increased the revenue guidance between 15% and 16%.

New Deal: The company added 103 new clients in Q2FY23. In the September quarter, for a $100 million plus bucket, the company added 39 new clients. It added 77 new clients in the $50 million plus bucket and 281 clients in the $10 million plus bucket.

Attrition rate: During the July-Sep quarter, Infosys saw a marginal decline in attrition at the company. The voluntary attrition rate decreased to 27.1% from 28.4% in the previous quarter but increased from 20.1% in the year-ago period. Infosys' total employee count increased by 10,032, taking the total count to 3,45,218.

Dividend: The Board of Infosys announced an interim dividend of Rs 16.50 per share, an increase of 10% over the FY22 interim dividend. The total amount of the interim dividend will be about Rs 6,940 crore. The company has fixed October 28, 2022, as the record date for the interim dividend and November 10, 2022, as the payout date. 

Buyback: The company has announced a buyback of shares worth Rs 9,300 crore via the open market route. Since it is an open market, retail investors won't be able to sell their shares.

Management Commentary: “Our strong large deal wins and steady all-round growth in Q2 reflects the deep relevance and differentiation of our digital and cloud solutions for clients as they navigate their business transformation”, said Salil Parekh, CEO, and MD, Infosys.

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