India’s Infosys lifts annual revenue view as pandemic fuels digital boom

FILE PHOTO: The Infosys logo is seen at the SIBOS banking and financial conference in Toronto
FILE PHOTO: The Infosys logo is seen at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017. Picture taken October 19, 2017. REUTERS/Chris Helgren/File Photo

July 14, 2021

By Sethuraman N R and Sankalp Phartiyal

BENGALURU (Reuters) -Infosys Ltd raised its annual revenue forecast on Wednesday, as India’s second-largest IT services company wins more contracts from global businesses expanding their digital offerings during the COVID-19 pandemic.

The outlook raise followed a strong first quarter in which the company’s profit jumped 22.7%, mirroring upbeat results from bigger rival Tata Consultancy Services Ltd and underscoring demand for India’s outsourcing service providers.

The company signed several large contracts in the quarter in fields such as cloud, data and analytics, Chief Executive Officer Salil Parekh said in a news conference.

Infosys said it expects revenue growth of 14% to 16% for the financial year to March 2022, compared with the 12% to 14% growth predicted in April.

The Bengaluru-based firm also maintained its margin forecast for fiscal 2022 at 22% to 24%.

“Given Infosys’ strong deal pipeline, increasing internet penetration and healthy balance sheet, the outlook for the stock remains optimistic,” said Likhita Chepa, senior research analyst at CapitalVia Global Research.

Large deal flows remained strong in the quarter ended June 30 with a total contract value of $2.6 billion, compared with $1.74 billion a year earlier.

Revenue from operations climbed 17.9% to a record 278.96 billion rupees ($3.75 billion), spurred by a 47% jump in the digital business that accounted for more than half of the total revenue.

Consolidated net profit came in at 51.95 billion rupees, but missed analysts’ estimates of 53.34 billion rupees, according to Refinitiv IBES data.

With India’s COVID-19 cases continuing to decline, Infosys said it expects up to 30% of its staff to work from the office over the next six months.

($1 = 74.4670 Indian rupees)

(Reporting by Nallur Sethuraman in Bengaluru and Sankalp Phartiyal in New Delhi; Editing by Anshuman Daga, Sriraj Kalluvila and Aditya Soni)