In a pivotal movement for the tech industry, Infosys Ltd, a leading name in technology services and consulting, has recorded a remarkable 30 percent surge in its net profit for the fourth quarter, concluding March 2024. The financial report reveals a net profit of Rs 7,969 crore compared to the Rs 6,128 crore announced in the same period the previous year. Nevertheless, amidst this profit escalation, the company’s operating margin witnessed a marginal downturn.
Time and again, Infosys has proven to be a juggernaut in the tech sector, and this latest revenue reporting is no exception. Achieving revenues amassing Rs 37,923 crore, the company indicates a 1.3 per cent increment from the Rs 37,441 crore posted a year earlier. However, the company’s operating margin has slightly dipped to 20.1 per cent, displaying a 0.9 per cent year-on-year decline and a 0.4 per cent fall from the preceding December quarter.
In a sobering counterpoint to the rise in profits, Infosys tempered the market’s expectations by revising its revenue growth forecast for fiscal year 2025 down to 1-3 per cent from the earlier 4-7 per cent estimate, citing persistent weaknesses in client discretionary spending. This forecast adjustment resonated through the financial markets, evidenced by a 7 per cent fall of the company’s American Depository Receipts on the New York Stock Exchange following the announcement.
The company’s board has put forward a generous final dividend proposal of Rs 20 per equity share for the financial year ending March 31, 2024, with an additional special dividend of Rs 8 per share, exemplifying its commitment to rewarding shareholders.
Turning the spotlight on to Infosys’ leadership, CEO and MD Salil Parekh reflected on the company’s stellar performance. “We delivered the highest ever large deal value in the financial year 2024, an endorsement of the deep trust our clients place in us,” he stated. Parekh highlighted the company’s growing prowess in Generative AI, focusing on its applications spanning from software engineering to process optimization and customer support. He expressed gratitude towards the 317,000 global employees who have been integral in creating outstanding value for the clients.
Jayesh Sanghrajka, the CFO of Infosys, emphasized the company’s robust financial muscle, demonstrated by a free cash flow of $848 million in the fourth quarter – the highest seen in 11 quarters. This achievement is the fruit of a strategic focus on enhancing the working capital cycle. Sanghrajka underscored the company’s resolution to maintain consistent and predictable shareholder returns, introducing a capital allocation policy wherein Infosys anticipates an 85 per cent return over the subsequent five years along with a progressive increase in annual Dividend Per Share.
In terms of yearly performance for FY 2024, Infosys has posted a net profit of Rs 26,233 crore, marking an 8.9 per cent rise, with revenues scaling to Rs 153,670 crore, a 4.7 per cent growth. Staying true to its shareholder-friendly posture, Infosys envisions a continuation of returning approximately 85 per cent of the free cash flow cumulatively over a five-year period, encompassing semi-annual dividends or share buybacks/special dividends, contingent upon legal prerequisites and necessary approvals.
In an affirmation of confidence in its CEO’s leadership, the board has moved to grant Salil Parekh annual performance-based stock incentives. These come in the form of restricted stock units (RSUs) valued at Rs 34.75 crore, vesting 12 months post-grant and contingent on the attainment of predetermined performance objectives.
Yet not all trajectories within the company are ascendant. Infosys saw an unusual year-over-year reduction in its headcount for FY24, the first since 2001. The workforce count as of March 31 stood at 317,240, a notable decrease by 25,994 from the previous fiscal year. This contrasts starkly with the company’s previous talent acquisition trends, where it had expanded its employee strength significantly.
The unfolding developments in Infosys paint a nuanced picture of a company navigating the complex waters of the global technology market, driving growth while adapting to dynamic market demands.
