Infosys Q1 net profit up 3.7% to Rs 3,612 cr; announces 1:1 bonus issue
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Bengaluru, Jul 13 (PTI) Infosys Ltd, India's second-biggest software services exporter, today posted a lower-than-expected 3.7 per cent rise in net profit for the quarter ended on June 30, 2018, due to a one-off charge related to fair value reduction of up-for-sale Panaya business.
The company also announced a surprise element, a 1:1 bonus share - that is one free share for every share held.
The consolidated net profit in April-June at Rs 3,612 crore, or Rs 16.62 a share, was higher than Rs 3,483 crore, or Rs 15.24 a share, net earnings in the same period of the previous fiscal.
"Overall, we see a good demand environment across the US, Europe and Asia Pacific. In terms of the sector demand, we see strength in energy, utilities, retail, insurance and manufacturing," Infosys CEO Salil Parekh told reporters here.
On a sequential basis, the profit, however, declined 2.1 per cent from Rs 3,690 crore posted in January-March quarter. Infosys said it accounted for Rs 270 crore reduction in fair value of Panaya business in the quarter.
"On re-measurement, including consideration of progress in negotiations on offers from prospective buyers for Panaya, the company has recorded a reduction in the fair value of Disposal Group held for sale amounting to Rs 270 crore in respect of Panaya. Consequently, profit for the three months ended June 30, 2018, has decreased by Rs 270 crore resulting in a decrease in basic earnings per equity share by Rs 1.24 for the quarter ended June 30, 2018," Infosys said in a statement.
The USD 200 million Panaya buy had been one of the flashpoints between Infosys' high-profile founders led by NR Narayana Murthy and its former management but interestingly, the new Infosys’ Board—under Chairman Nandan Nilekani’s leadership later gave a clean chit to the Panaya deal saying there was no merit in any allegations of wrongdoing.
In April this year, Infosys said it has decided to sell its subsidiary Panaya.
"We had identified that for Panaya and Skava we will explore sale and we started negotiations during this quarter. Based on the progress we have made at this juncture and based on our judgement at this stage, we have taken a reduction in fair value by USD 39 million and the negotiations are still in progress," Infosys CFO MD Ranganath said.
Revenue rose 12 per cent to Rs 19,128 crore as the firm maintained earnings guidance for the fiscal year ending March 2019 at 6-8 per cent in constant currency terms. The FY2018-19 operating margin guidance has also been retained at 22-24 per cent. Infosys has delivered operating margin at 23.7 per cent, hitting the upper end of the guidance band.
Sanjeev Zarbade Vice President – Research Kotak Securities Ltd said Infosys results missed the street estimates.
Earlier this week, larger rival and the country's biggest IT firm, Tata Consultancy Services (TCS), posted a net profit of Rs 7,340 crore in the June quarter. Ahead of the earnings announcement, Infosys shares closed 1.12 per cent higher at Rs 1,309.10 on BSE.
Infosys said large deal wins crossed USD 1 billion, of which over 40 per cent was from the financial services business. The company also managed to add four USD 100 million clients to take it to 24 on a sequential basis.
Capping the second quarter of earnings scorecard under Parekh's watch, Infosys' net profit, in dollar terms, declined 1.2 per cent year on year to USD 534 million for the quarter ended June 30, 2018, including impact of USD 39 million on account of reduction in the fair value of assets held for sale.
Revenues came in at USD 2,831 million for June quarter, translating into a year-on-year growth of 6.8 per cent and sequential rise of 0.9 per cent. Digital revenues stood at USD 803 million (28.4 per cent of total revenues), displaying a sequential growth of 8 per cent and year-on-year jump of over 25 in constant currency terms, Infosys said.
The company said it has voluntarily delisted its American Depository Shares (ADSs) from Euronext Paris and London on July 5, 2018 and its ADS were removed from Euroclear France on July 10, 2018. Infosys ADSs will continue to be listed on the NYSE, it said.
The Board approved issue of bonus shares to mark the 25th year of its public listing in India and to further increase the liquidity of its shares.
"The Board in its meeting...has considered, approved and recommended a bonus issue of one equity share for every equity share held and a stock dividend of one American Depositary Share (ADS) for every ADS held, as on a record date to be determined," the company said in the regulatory filing.
Employee headcount stood at 2.09 lakh in quarter ended June 2018 and the net addition of employees was 5,798. PTI BDN PRS MBI MBI MR MR
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