Infosys Q4 net up 6.3% at Rs 4,335 cr, suspends FY21 guidance citing biz uncertainty

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India's IT services industry would see hiring freeze this year and senior level staff taking a 20-25 per cent salary cut ,industry veteran T V Mohandas Pai.
IT services industry, COVID-19, Infosys, Representative image

New Delhi, Apr 20 (PTI) Infosys on Monday posted 6.3 per cent rise in consolidated net profit for March quarter but refrained from providing a revenue outlook for FY21, citing uncertainty amid COVID-19 outbreak that is expected to impact its business in the near-term.

The country’s second-largest IT services company – which saw revenue growing 8 per cent to Rs 23,267 crore in the March quarter – said it will honour all the offers already made to freshers and lateral hires but has suspended salary hikes and promotions for staff.

Infosys anticipates a continued slowdown in the near-term influenced by a broad-based global economic recession.

“Our sense is that in the near-term we will see an impact on our business. We do not have a clear view of when the recovery will come back,” Infosys CEO and MD Salil Parekh told reporters.

Parekh’s views are similar to the sentiments echoed by peers like Wipro and Tata Consultancy Services — both had cited future business uncertainty while announcing their quarterly earnings last week.

Incidently, Wipro had resisted from providing a revenue growth forecast for June quarter, while Cognizant had retracted its annual outlook for 2020.

The results were announced after the close of trading hours. Infosys scrip closed at Rs 652.90 on BSE, 3.7 per cent higher than the previous close.

Sanjeev Hota, Head of Research at Sharekhan by BNP Paribas, said Infosys reported below-than-expected revenue and EBIT margin performance.

Infosys COO Pravin Rao said industries across geographies will feel the impact of coronavirus pandemic, and client spending in sectors like retail could remain challenged.

“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,” he added.

The company – which had posted a net profit of Rs 4,078 crore in the March 2019 quarter – disclosed that about 93 per cent of its workforce is now enabled to work from home in countries under the lockdown.

In India, where the nationwide lockdown has been extended till May 3, the company said it is in no hurry to get employees back on premises.

“Our plan is to come back in a gradual manner, we are not in hurry to come back aggressively. In phase one, less than 5 per cent will come back to work for 3-4 weeks. Over the next 4-8 weeks, maybe 15-20 per cent will come back in a gradual manner. We will maintain very high standards of safety, temperature check, social distancing,” he said.

Rao added that the Bengaluru-based company is also exploring if it can set up a testing facility at its campus.

Infosys has said a few of its employees globally have tested positive for COVID-19, and that it has undertaken contact tracing measures to identify colleagues, if any, who interacted with them in order to ensure they are appropriately quarantined.

Parekh exuded confidence that while the immediate short-term will be challenging, the company will emerge from this “stronger” as clients in every industry will need to accelerate their digital channels in this new normal.

The company said its Q4 digital revenues were at USD 1,341 million (41.9 per cent of total revenues), registering a year-on-year growth of 31.7 per cent in constant currency term.

In the near-term, Infosys said it is poised to confront the challenge, help its clients navigate through it as well, and emerge resilient.

“The company’s confidence stems from its strong balance sheet, with approximately USD 3.605 billion (Rs 27,276 crore) in cash and cash equivalents including investments with zero debt as of March 31, 2020,” the company said.

The board has recommended a final dividend of Rs 9.50 per equity share for FY20.

It has also approved the performance-based grant of RSUs amounting to Rs 13 crore for FY21 under the 2015 Stock Incentive Compensation Plan (2015 plan) to Parekh.

The restricted stock units will be granted with effect from May 2, 2020 and the number of RSUs will be calculated based on the market price at the close of trading on May 2, 2020. Another grant was also made to him under the Infosys Expanded Stock Ownership Program-2019 (2019 Plan).

The IT major said the Board has appointed Uri Levine as additional and an Independent Director for a period of three years, subject to approval of the shareholders. Also, D N Prahlad – an independent director at the company – is stepping down from the Board to devote more time for his other business commitments.

Providing an update on the whistleblower allegations that had accused top leadership of unethical practices, Infosys said it is responding to all the inquires received from Indian regulatory authorities.

“Additionally, in October 2019, a shareholder class action lawsuit was filed in the United States District Court for the Eastern District of New York against the Company and certain of its current and former officers for alleged violations of the US federal Securities Laws. The company is presently unable to predict the scope, duration or the outcome of these matters,” it added.

It said its FY20 net profit was up 8 per cent to Rs 16,639 crore, while revenue up 9.8 per cent to Rs 90,791 crore from last fiscal. The company has declared a final dividend of Rs 9.50 per share.

The company – which saw its attrition growing to 20.7 per cent – had 2.42 lakh employees at the end of March 2020. This is lower than the December 2019 quarter when the company had 2.43 lakh employees.

In dollar terms, Infosys’ Q4 net profit was higher by 1.9 per cent to USD 592 million, while revenue rose 4.5 per cent to USD 3.1 billion.

For FY20, net profit was higher by 6.3 per cent to USD 2.3 billion, while revenue increased 8.3 per cent to USD 12.7 billion from last fiscal.

Source: PTI

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