Infosys won't work with Russian clients, says Salil Parekh

India's second-largest software services company saw its net profit in January-March surge to Rs 5,686 crore and projected a 13-15 per cent revenue growth in the fiscal year that began on April 1, 2022 on the back of a "strong demand environment" and "robust deal pipeline".

Infosys hired 85,000 freshers globally and in India during the year ended March 31, 2022, and is planning to hire over 50,000 freshers in FY23.

However, the firm's 12-month attrition soared to 27.7 per cent in the March quarter, as an industry-wide war for talent and dynamic demand environment kept the sector's attrition levels high.

Infosys asserted it is not engaged in any business with Russian clients currently, nor has any such plans going ahead.

"The work we do is for a few of our global clients that have operations in Russia. We have less than 100 employees in Russia.

“Working with our clients, we are in the process... we've initiated, how we can transition some of that work, all of that work outside of Russia," Infosys CEO Salil Parekh told reporters during the Q4 earnings briefing.

Parekh categorically added: "We have no work with any Russian client today. And we have no plans for any work with any Russian client going ahead."

Its operations in Russia had come under the scanner following UK Finance Minister Rishi Sunak's call to companies to boycott the country after President Vladimir Putin ordered troops into Ukraine.

Sunak is married to Akshata Murty, daughter of Infosys co-founder Narayana Murthy.

"We work with no Russian clients, and the work we do is with a small number of global clients in Russia, for which as I just mentioned, we have started the transition.

“So at this stage, we have no impact within our business given what is going on from an Infosys perspective," Parekh said.

The Bengaluru-headquartered company posted net profit (after minority interest) of Rs 5,686 crore in the just-ended quarter against Rs 5,076 crore in Q4 FY21.

While the Q4 results scorecard reflects a 12 per cent year-on-year growth in net profit, the numbers are 2 per cent lower than the December quarter.

On why the Q4 numbers have trailed the street's expectations, Parekh said while there has been a strong volume growth in the quarter, there was an issue with a client related to a contract situation.

"We see a very good momentum into our business as we look ahead," Parekh affirmed.

Infosys' revenue grew 22.7 per cent to Rs 32,276 crore in Q4 FY22.

"Our sustained momentum in FY22, large deal wins, robust deal pipeline and client confidence in our capabilities gives us comfort to provide a guidance of 13 to 15 per cent for growth in fiscal 2023," Parekh said.

At the start of FY22, Infosys had projected that full year revenue will grow 12-14 per cent in constant currency terms.

During the year, however, the company upped its outlook a few notches and in January this year, the revenue growth guidance for FY22 was raised to 19.5 - 20 per cent.

"What we've had in terms of large deals, and what we are seeing in our pipeline going ahead, gives us confidence about the guidance we start the year with, at 13 to 15 per cent.

“As the year progresses, we'll see what the various forces are that will play into all of this," Infosys' top boss said.

For full year FY22, Infosys' net profit was up 14.3 per cent to Rs 22,110 crore, as revenue rose by 21 per cent to Rs 1,21,641 crore compared to the previous fiscal.

The company said growth during the fiscal was broad-based, spread across business segments, service lines, and geographies.

Infosys board has proposed a final dividend of Rs 16 per share, taking the total dividend for FY22 to Rs 31 per share, an increase of 14.8 per cent over the prior year.

With this, the company has announced total dividend of about Rs 13,000 crore for FY22.

In dollar terms, the Q4 net profit stood at $752 million, nearly 8 per cent higher year-on-year, while the revenue came in at $4,280 million, 18.5 per cent more than the year-ago period.

For the full year, net profit at $2.9 billion was 13.4 per cent higher than the previous fiscal.

The revenue grew 20.3 per cent to $16.3 billion.

"Infosys delivered $16.3 billion in revenues with the highest annual growth in the last decade of 19.7 per cent in constant currency with a robust operating margin of 23 per cent.

“Growth was broad-based, supported by continued momentum in large deal wins with TCV (total contract value) of $9.5 billion," the company said in a statement.

According to Infosys, the TCV of large deal wins was $2.3 billion in Q4.

To a question on the impact of the Russia-Ukraine war on the company's business, Parekh said, "Given what is going on in the region, we have started to transition all of our work from our centre in Russia, to our centres outside Russia."

The declined to comment on the controversy surrounding Akshata Murty's stake and whether the company is facing client queries on that, saying: "With respect to discussions in the UK, we have no comments to make on any individual shareholders."

In a regulatory filing, Infosys said the board on Wednesday, based on the recommendations of the nomination and remuneration committee, approved annual performance-based grant of restricted stock units (RSUs) amounting to Rs 13 crore for FY23 under the 2015 Stock Incentive Compensation Plan to Salil Parekh, CEO and MD.

"This is pursuant to the approval from the shareholders through postal ballot concluded on February 20, 2018 and as per the shareholders' approval in the Annual General meeting held on June 22, 2019.
“These RSUs will vest in line with the current employment agreement," it said.

The RSUs will be granted with effect from May 2, 2022 and the number of RSUs will be calculated based on the market price at the close of trading on May 2, 2022.

Infosys shares closed 0.41 per cent higher at Rs 1,748 apiece on BSE on Wednesday.

The results were declared after market hours.