Infosys Q4 net up 6.3% at Rs 4,321 cr, suspends FY21 guidance

Company abstains from giving annual revenue projections owing to COVID-19 uncertainties, appoints new board member

Infosys refrained from providing growth projection for FY21 on Monday, in line with its peers, owing to uncertainties around the Covid-19 pandemic. This was despite the firm falling just 20 basis points (bps) short of a double-digit growth rate in FY20 in constant currency (CC) terms.
 

It reported Rs 4,321 crore in consolidated net profit in the March quarter (Q4FY20), a year-on-year (YoY) growth rate of 6.3 per cent. However, it dropped 2.73 per cent sequentially.

Revenue for Q4 stood at Rs 23,267 crore, a growth rate of 8 per cent YoY; sequentially it grew 0.8 per cent. In dollar terms, revenues stood at $3.19 billion — a 6.4 per cent YoY rise.

The operating margin contracted 80 bps to 21.1 per cent — the lowest in three quarters. It announced a dividend of Rs 9.50 per share, too.

For FY20, net profit rose 8 per cent to Rs 16,639 crore, while revenue rose by 9.8 per cent to Rs 90,791 crore — both in reported currency and CC terms. Revenue growth, however, remained the highest vis-à-vis Tata Consultancy Services (TCS) and Wipro. In dollar terms, revenue stood at $12.78 billion for the financial year.

The operating margin for FY20 was 21.3 per cent, 150 bps less than in FY19, though it was well within its guided range of 21-23 per cent.
 

Considering the uncertainty due to Covid-19, the firm said it was unable to provide guidance on revenues and margins for FY21. “We had an exceptional year with growth of 9.8 per cent and operating margin of 21.3 per cent,” said Salil Parekh, MD and CEO.

“While the immediate short-term will be challenging, we can see that there is strong interest to consolidate with partners of high-quality and agile service delivery, and strong financial resilience.”

Infosys won $1.65 billion worth of large deals in Q4, taking the total to $9 billion in FY20 — among the highest for the firm. “Our deal pipeline is strong and we even signed deals in the last two weeks of March,” said Parekh. 

With a likely demand slowdown in coming quarters, Infosys sees its margin contracting in the near term, and has taken up various cost optimisation moves to save costs.

“We have already taken various decisions such as no salary increments or promotions until things improve. Besides, our travel cost has also reduced significantly due to work from home,” said Nilanjan Roy, chief financial officer.

Among verticals, life sciences grew 11.9 per cent YoY, while hi-tech and manufacturing grew more than 7 per cent in Q4. BFSI grew 5.7 per cent and retail grew 4.2 per cent. “We see weakness across all verticals, including BFSI, retail, and manufacturing in the near term.

However, the crisis is likely to prompt vendor consolidation, from which Infosys is likely to benefit,” said U B Pravin Rao, chief operating officer.
 

Meanwhile, Infosys has announced the departure of independent board member D N Prahlad, who it said resigned from the company to devote more time for other business commitments, with effect from April 20. Uri Levine, a serial tech entrepreneur, has joined the board as an independent director, the company said.