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Infosys: Broad based growth in H1 of 20.1% in constant currency; Q2 margins expand 150 bps sequentially

By   /  October 13, 2022  /  Comments Off on Infosys: Broad based growth in H1 of 20.1% in constant currency; Q2 margins expand 150 bps sequentially

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BENGALURU, India :  Infosys (NSE: INFY) (BSE: INFY) (NYSE: INFY), a global leader in next-generation digital services and consulting, reported strong Q2 performance with year-on-year growth at 18.8% and sequential growth at 4.0% in constant currency. Year-on-year growth was in double digits across all business segments in constant currency terms. Digital comprised 61.8% of overall revenues and grew at 31.2% in constant currency. Operating margin for the quarter increased sequentially by 150 bps to 21.5%. Large deal TCV for the quarter was robust at $2.7 bn, highest in last 7 quarters. FY 23 revenue guidance is revised to 15%-16%; operating margin guidance is also revised to 21%-22%.

 

 

“Our strong large deal wins and steady all-round growth in Q2 reflect 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. “While concerns around the economic outlook persist, our demand pipeline is strong as clients remain confident in our ability to deliver the value they seek, both on the growth and efficiency of their businesses. This is reflected in our revised revenue guidance of 15%-16% for FY 23,” he added.

 

31.2% YoY

 

CC Digital growth

 

18.8% YoY

 

4.0% QoQ

 

CC Revenue growth

 

21.5%

 

Operating margin

 

(in $ terms)

 

11.5% YoY

 

Increase in EPS

 

(₹ terms)

 

$2.7 bn

 

Large deal TCV

 

  1. Key highlights:

 

For the quarter ended September 30, 2022

 

Revenues in CC terms grew by 18.8% YoY and 4.0% QoQ

Reported revenues at $4,555 million, growth of 13.9% YoY

Digital revenues at 61.8% of total revenues, YoY CC growth of 31.2%

Operating margin at 21.5%, decline of 2.1% YoY and increase of 1.5% QoQ

Basic EPS at $0.18, growth of 2.5% YoY

FCF at $589 million, decline of 17.3% YoY; FCF conversion at 78.6% of net profit

For six months ended September 30, 2022

 

Revenues in CC terms grew by 20.1% YoY

Reported revenues at $8,999 million, growth of 15.7% YoY

Digital revenues at 61.4% of total revenues, YoY CC growth of 34.5%

Operating margin at 20.7%, decline of 2.9% YoY

Basic EPS at $0.34, growth of 0.8% YoY

FCF at $1,245 million, decline of 21.0% YoY; FCF conversion at 86.6% of net profit

“Operating margins in Q2 expanded sequentially by 150 bps, helped by our operational rigor. While supply side challenges are gradually abating as reflected in the reducing attrition rates, they continue to exert pressure on our cost structure,” said Nilanjan Roy, Chief Financial Officer. “In line with the capital allocation policy, the Board has announced an interim dividend of ₹16.50 per share, an increase of 10% over FY 22 interim dividend and an open market share buyback of ₹9,300 crores,” he added.

 

  1. Capital allocation

 

The Board in its meeting held today approved the following:

 

Buyback of Equity Shares, from the open market route through the Indian stock exchanges, amounting to ₹9,300 crore (Maximum Buyback Size, excluding buyback tax) (app. $1.13 bn*) at a price not exceeding ₹1,850 per share (Maximum Buyback Price), subject to shareholders’ approval.

Interim dividend of ₹16.50 per share (app. $0.20 per ADS*) vs. FY 22 interim dividend of ₹15. The total amount of interim dividend will be app. ₹6,940 crores (app. $0.85 bn*).

*USD-INR rate of 82.00

 

  1. Client wins and Testimonials

 

Currys plc entered into a strategic collaboration with Infosys for technology and business process services, to help accelerate profitable growth of their business across key UK and European markets. “As part of our ongoing transformation, Infosys will help us design and deliver a next-generation Group Business Services capability. This collaboration will give us access to world-class digital operations across UK, Europe and India, benefitting our colleagues and customers with best-in-class technology, systems, and processes; and new sources of competitive advantage for our core business,” said Bruce Marsh, Group CFO, Currys plc.

Infosys Cyber Next platform and Palo Alto Networks strengthened Bpost’s security posture as part of the cloud transformation journey. Rony Monnaie, CISO, Bpost, said, “While we embarked on our cloud transformation journey, Infosys drove several well-considered cybersecurity initiatives to protect our environment and improve Bpost’s overall security posture. Today, both our employees and customers benefit from the secure foundation we now have to deliver and track both mail and parcels.”

Spirit AeroSystems entered into a five-year collaboration with Infosys to co-innovate Aerostructure and Systems Engineering Services by leveraging Infosys’ next-gen technologies. “At Spirit AeroSystems, we believe our ability to continuously advance our offering at design and engineering levels is one of our competitive differentiators. Our longstanding collaboration with Infosys means we are well-positioned to co-innovate on critical stages of product development, ensuring we continue to pursue the highest standards in quality and airworthiness. This strategic agreement further reinforces our strengths and will leverage mutual synergies to accelerate the development of world-class, sustainable aerostructures and services across our commercial and aftermarket business segments,” said, Dr. Sean Black, Senior Vice President and Chief Engineer, Engineering and Technology, Spirit AeroSystems.

Infosys collaborated with Telenor Norway to accelerate their IT modernization and establish Telenor as a product-based organization through a co-managed model. Commenting on this collaboration, Birgitte Engebretsen, CEO, Telenor Norway, said, “In current times, it is imperative for an organization like Telenor Norway to stay ahead of the curve and ensure that our customers are provided with superior service. To do this, we have to be future-ready. Staying true to our strategy of ‘Beyond Connectivity’, combined with our powerful collaboration with Infosys, we are excited to embark on this modernization journey that will empower us to serve our customers better.”

“Infosys has been our technology partner for more than 5 years. Infosys has helped us transform not only our technology landscape, but also how we engage with students and colleagues helping us to develop new digital solutions and build new data platforms to gain real value and insights to better inform our decision-making,” said Judi Turnbull, Director for Information Technology at Open University.

  1. Recognitions

 

Infosys won the ‘Most Outstanding Company in India – IT Services Sector’ in Asia’s Outstanding Companies Poll 2022. Asiamoney has designed this poll to acknowledge the listed companies that have excelled in areas such as financial performance, management team excellence, investor relations activities, and CSR initiatives

Recognized as India’s Best Workplaces™ for Women 2022 by Great Place to Work®

Recognized as UK’s Best Workplaces™ in Tech 2022 by Great Place to Work®

Recognized among Mexico’s Best HR leaders of 2022 by Great Place to Work®

Positioned as a leader in Power & Utilities Industry – Services and Solutions 2022 by ISG Provider lens study in the US

Ranked as a leader in HFS Top 10: Sustainability Services, 2022

Positioned as a leader in HFS Top 10: Capital Markets Services, 2022

Positioned as a leader in End-to-End Cloud Infrastructure Management Services 2022 by NelsonHall

Ranked as a leader in IDC MarketScape: Asia/Pacific SAP Implementation Services Vendor Assessment, 2022

Recognized as a leader in EMEA Service Providers for Energy Transition and New Business Models for Oil and Gas Companies 2022 Vendor Assessment by IDC

Positioned as a leader by NelsonHall in Supply Chain Transformation 2022

Ranked as a leader by NelsonHall in Mortgage & Loan Services 2022

Ranked as a leader in Data and Analytics (D&A) Services PEAK Matrix® Assessment 2022 by Everest

Recognized as a leader in System Integration (SI) Capabilities on Amazon Web Services (AWS) PEAK Matrix® Assessment 2022 by Everest

Recognized as a leader in ServiceNow Services PEAK Matrix® Assessment 2022 by Everest

Positioned as a leader in System Integration (SI) Capabilities on Microsoft Azure PEAK Matrix® Assessment 2022 by Everest

Ranked as a leader in Avasant’s Digital Master’s 2022 RadarView™

Positioned as a leader in Avasant’s Freight and Logistics Digital Services 2022-23 RadarView™

Recognized as a leader in Avasant’s Life Sciences Digital services 2022-23 RadarView™

Ranked as a leader in Constellation ShortList™ Blockchain Technology Services

Positioned as a leader in Constellation ShortList™ Campaign to Commerce: Best-of-Breed Commerce Platforms

Ranked as a leader in Constellation ShortList™ Digital Transformation Services (DTX): Global

Positioned as a leader in Constellation ShortList™ Public Cloud Transformation Services: Global

Ranked as a leader in Constellation ShortList™ AI-Driven Cognitive Applications

Recognized as a leader in Constellation ShortList™ Customer Experience (CX) Operations Services: Global

Recognized as a leader in Constellation ShortList™ Metaverse Design and Services

Infosys BPM recognized as LEADER in Everest Group Financial Crime & Compliance Operations – Services PEAK Matrix® Assessment 2022

Infosys BPM ranked as LEADER in Nelson Hall NEAT: Supply Chain Transformation 2022

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