Infy Q2 net up 3.3%, cuts fullyear revenue forecast
SCORECARD Net profit beats expectations; board gives clean chit to Panaya deal BENGALURU:
Indian software services company Infosys Ltd trimmed its revenue forecast for the year despite reporting a surprise rise in quarterly profit. It said it expected its full-year revenue to rise 5.5-6.5% in constant currency, compared with its previous guidance of a 6.5-8.5% increase.
Profit after tax rose 3.3% to ₹3,726 crore ($573 million) in the second quarter, beating the average analysts’ estimate of ₹3,523 crore, according to Thomson Reuters data.
Infosys veteran and interim chief executive UB Pravin Rao said the company responded quickly to board and management changes, “minimising any negative impact to the business”.
The results are the first since Vishal Sikka quit as chief executive in August after a lengthy feud between the board and the company founders that also led to a reorganisation of the board. Nandan Nilekani, a co-founder and a former CEO, was named chairman and the company continues to search for a new CEO.
Bengaluru-based Infosys said its revenue from operations rose 1.5% to ₹17,567 crore in the second quarter.
Revenue from the financial services segment rose marginally to ₹4,718 crore.
The Infosys board also reaffirmed that an investigation into alleged improprieties related to the acquisition of Israeli automation firm Panaya found no evidence of any wrongdoing.
India became a back office to the world in the early 2000s as companies subcontracted work to firms such as Infosys, taking advantage of the skilled Englishspeaking workforce.
India’s $150-billion IT sector has long been one of its flagship industries but it is facing upheaval in the face of automation, a failure to keep up with new technologies and US President Donald Trump’s threat to clamp down on visas.
Shares of Infosys fell by 1.37% to ₹926.75 on the BSE.
The software major has fixed 1 November as the record date for its up to ₹13,000 crore share buyback programme.
“The buyback committee has approved and fixed 1 November 2017 to be the record date for determining the entitlement and the names of the equity shareholders to whom the letter of offer will be sent and will be eligible to participate in the buyback...,” Infosys said in a regulatory filing.
It added that the buyback proposal had been approved by the board on 19 August and by the shareholders earlier Monday. The share buyback, which will be the first in the company’s 36-year long history, will see Infosys buying back over 11.30 crore shares at Rs1,150 apiece.
The buyback had been a long standing demand by some of the founders and high-profile former executives, who have been pushing Infosys to return surplus capital to its shareholders. Share buybacks typically improve earnings per share and return surplus cash to shareholders, while supporting share price during period of sluggish market condition.
Earlier this year, its larger rival Tata Consultancy Services completed a ₹16,000-crore mega buyback offer. Other competitors like Cognizant, Wipro and Mindtree had also made similar announcements.
Infosys has also fixed November 1 as the record date for payment of interim dividend, subject to board decision on the same. Infosys is slated to announce its financial results for the July-September 2017 quarter on October 24.
REUTERS AND PTI