Infosys Hits Record High After Reporting Fastest Revenue Growth in a Decade

Shares of Infosys hit a fresh record high of Rs 1,597.3, up 1.3% on the BSE today after the IT major delivered another handsome set of numbers for the quarter ended June.

The company's large deal wins and continued market share gains boosted top line. The performance was the best in a decade in the first quarter of a financial year.

For the quarter ended June 2021 (first quarter of 2022), Infosys reported a consolidated net profit of Rs 52 bn, up 22.7% year-on-year (YoY).

The company's revenue grew 17.9% to Rs 278 bn on a YoY basis. Its US dollar revenue grew 4.7% sequentially to US$3.8 bn. In constant currency terms, it was up 4.8%.

The company reported a 6% sequential rise in consolidated revenue from operations for the quarter, while consolidated net profit grew nearly 2.5% in the same period.

While the topline was slightly ahead of street's estimates, the bottom line missed the mark by some distance.

Guidance upgrades on strong deal wins

Infosys won large deals worth US$2.6 bn in the June quarter, picking up from the March quarter.

The strong deal win momentum saw the company upgrade its full-year revenue growth guidance to 14-16% for 2021-22 from 12-14% earlier.

With nearly every vertical of the company clocking double-digit growth, Infosys finds itself in a sweet spot.

Staffing crisis to worsen

While an upbeat view of the management on the revenue front may ease investor concerns over the sector's slowing momentum, the company is facing an immense struggle in retaining talent just like its peers.

Last 12-month attrition rate jumped 13.9% from 10.9% in the previous quarter reflecting the ongoing struggle to secure staff.

Infosys said it expects attrition to remain high in the coming quarters as supply issues may not ease soon despite commitments to hire more 35,000 freshers worldwide.

ITR portals issues to ease soon

Infosys' reputation took a major knock in the recent weeks after the botched rollout of a new online portal for filing of income-tax returns (ITR) in India.

The company is the vendor for the new online ITR portal, which has been beset with issues from its debut in June.

Chief Operating Officer UB Pravin Rao said the company was working on resolving the current issues and has enlarged the team on the project.

However, he said no post-mortem has been done on why such issues cropped up in the first place.

Equitymaster's view on investing in the IT sector right now

We reached out to Richa Agarwal, senior research analyst and editor of the smallcap stock recommendation service, Hidden Treasure, for her view on the IT sector.

Here's what she has to say about investing in companies in the IT sector right now.

• Post pandemic, amid liquidity in the global markets and broad-based growth momentum, the IT sector and the stocks listed in it have had a dream run.
  
  While picking stocks in the industry, one should be mindful of relative growth and valuation of companies in the sector.

IT sector is one of those few sectors, which remained unaffected by the Covid sell-off. In fact, IT stocks emerged bull's favourite during the Covid-19 pressure.

How the stock markets reacted to Infosys

Shares of Infosys opened the day at Rs 1,554 on the BSE and Rs 1,557.9 on the NSE.

Its share price closed at Rs 1,580.3 (up 0.2%) on the BSE and Rs 1,580.8 (up 0.3%) on the NSE.

At its current price, it is trading at a P/E of 34.6.

The share touched its 52-week high of Rs 1,597.3 and 52-week low of Rs 781.5 on 15 July 2021 and 15 July 2020, respectively.

Over the last 30 days, the Infosys share price is up 8.1%. Over the last one year, the company's share price is up 98.2%.

About Infosys

Infosys is a large Indian IT services company, offering a range of digital and traditional IT services.

From humble beginnings in 1981, the company now counts itself amongst the largest and most respected global software firms. It's known around the world for its visionary management, work ethics and corporate governance standards.

The company caters to industry verticals such as financial services, retail, communication, manufacturing, hi-tech, life sciences, energy, utilities, resources, and services.

Infosys has always had visionary management to guide the company through good times and bad.

Over time, Infosys' management has earned a reputation for being ahead of the curve in terms of human resource management policies and investor relations.

For more details about the company, you can have a look at Infosys company factsheet and quarterly results on our website.

You can also compare Infosys with its peers.

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Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...