Infosys has announced four buybacks since its initial public offering in 1993.
Infosys, India’s second largest IT service company on October 13 reported 11% rise in consolidated net profit at Rs 6,021 crore for the September quarter and a Rs 9,300 crore share repurchase programme.
Since its initial public offering in 1993, the company has announced four buybacks.
The Bengaluru-based company increased its FY23 revenue growth guidance to 15–16%, pushing the forecast towards the higher end of the previously-projected 14–16% band. This was accomplished despite global macroeconomic concerns thanks to a "strong large deals pipeline" and good demand momentum.
An interim dividend of Rs 16.50 per share has also been declared by the Infosys board. The company announced in a statement that the estimated payout for the interim dividend will be Rs 6,940 crore.
The company has set October 28 as the interim dividend record date and November 10 as the interim dividend payout date.
For the second quarter ended September 2022, Infosys, which competes with Tata Consultancy Services, Wipro, and HCL Technologies for outsourcing contracts, reported an increase in consolidated net profit of 11% year over year to Rs 6,021 crore.
In the second quarter that ended in September, revenue increased 23.4% from the previous year to Rs 36,538 crore.
The Q2 showing was "broad-based with all industries and geographies growing in double digits in constant currency," Salil Parekh, CEO and MD of Infosys said at a briefing.
With "operational rigour," margins increased by 150 basis points sequentially, and supply-side pressures subsided a little bit as attrition dropped to 27.1% from 28.4% in the June quarter.
Parekh said, "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 per cent for FY23".
For a price of up to Rs 1,850 per equity share, the company has announced an open market share buyback worth Rs 9,300 crore. The buyback price is 30% more expensive than the Thursday closing scrip price of Rs. 1,419.7 per share.
Share buyback is seen as an alternative, tax-efficient way to return money to shareholders.
Among the headline metrics, the large deal total contract value for the quarter was robust at USD 2.7 billion, in fact, the highest in the last seven quarters.
Revenues from the digital sector, which accounted for 61.8% of total revenues, increased by 31.2% in constant currency. Operating margin rose sequentially by 140 basis points to 21.5 percent for the quarter.
As opposed to the earlier stated range of 21–23%, the company has now lowered the upper end of operating margin guidance and now anticipates an operating margin for FY23 in the range of 21–22%.
"While supply side challenges are gradually abating as reflected in the reducing attrition rates, they continue to exert pressure on our cost structure," Nilanjan Roy, Chief Financial Officer of the company, said.
While the company has a healthy pipeline of significant deals, according to Parekh, it is keeping an eye on the macroenvironment.
"We indicated that we had started seeing concerns on mortgage side, financial services and retail industry... we are seeing, this time, some concerns in high tech and telecom space in addition, more on discretionary part," Parekh said but assured that overall "the pipeline for large deals remain quite strong today".
On October 13 at Rs. 1420, Infosys closed with a loss of Rs 8.8 on the National Stock Exchange. The stock has generated negative returns of 17% over the last year and is down 8% over the last month amid the current uncertain environment engulfing the IT sector.
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