Banking, retail lead Infosys’ Q1 growth; company raises FY22 forecast

Infosys, India’s second-largest software services provider and among the bellwether stocks, reported consolidated profit of ₹5,195 crore for the first quarter ended June 2021. While its sequential growth vis-à-vis growing Q4 FY21 was 2.3%, its year-on-year growth against Q1 FY21 was 16.9%.

The company’s consolidated revenue, in rupee terms, rose 6% quarter-on-quarter (QoQ) to ₹27,896 crore; in dollar terms, the growth was 4.7% to $3,782 million. Further, Infosys increased its revenue growth guidance for FY22 to 14-16%, against the earlier 12-14%.

The Bengaluru-based IT major said it had signed large deals worth $2.6 billion during Q1. Also, it added two new clients in the $100 million-plus category as well as 12 new clients in the $10 million-plus category.

‘Fastest Q1 growth’

Infosys had seen the strongest first-quarter growth in a decade, said MD and CEO Salil Parekh. “Driven by the dedication of our employees and the trust of our clients, we grew at the fastest pace in Q1 in a decade, at 16.9% year-on-year and 4.8% quarter-on-quarter in constant currency. I am proud of our employees, who as ‘One Infosys’ demonstrate resilience and commitment in delivering for our clients. This gives us confidence to increase our revenue growth guidance to 14%-16%,” he said in a press statement.

“As Infosys completes forty remarkable years, its continuing success and global impact are a testament to the vision of the founders and all the leaders who have shaped the company,” he added.

Also read: India’s struggle with COVID made me cry, says Sundar Pichai

The digital business growth remained strong and was the key driver for topline, rising 9.7 percent sequentially to $2,040 million, but the core business was down 0.7 percent QoQ at $1,742 million for the June 2021 quarter.

Sectors that shone

Infosys’ growth during the quarter was led by the BFSI (banking, financial services and insurance) and retail vertical, which grew about 22% year-on-year in constant currency terms. The life sciences vertical was another revenue driver, posting over 21% growth.

In keeping with the trend seen by its industry peers, Infosys saw the total contribution of its digital business to revenue appreciate to 53.9% in the June quarter, against 51.5% in the March quarter.

In terms of geographies, North America led the show, with sales growing 21.1% year-on-year. This was followed by India, which saw a 20.7% growth in sales. European sales for the company increased 12.2%.

Recruitment plans

Attrition remained a concern for Infosys in Q1. Its voluntary attrition rate spiked to 13.9% in Q1 FY22, against 10.9% in FY21.

The company said it plans to expand its campus hiring programme, particularly to address the rise in digital business. Pravin Rao, Chief Operating Officer, said in the press release. “As the demand for digital talent explodes, rising attrition in the industry poses a near-term challenge. We plan to meet this demand by expanding our hiring programme of college graduates for FY 22 to about 35,000 globally,” he said.