Infosys offers Rs10,000-cr buyback and dividend after profit fall

Infosys Ltd today announced a Rs8,260-crore share buyback and a special dividend of Rs4 per share, after India’s second-largest information technology firm reported a 29.62 per cent drop in consolidated net profit to Rs3,610 crore for the December quarter. 

Infosys had posted a Rs5,129-crore net profit in the corresponding quarter last year, the company said in a BSE filing. 
Net sales for the quarter, however, jumped 20.3 per cent YoY to Rs21,400 crore. On a sequential basis, sales grew 3.8 per cent in rupee terms and 2.7 per cent in constant currency terms. 
Revenues for the quarter grew 10.1 per cent year-on-year in constant currency terms and by 20.3 per cent in rupee terms. Revenues grew 2.7 per cent in constant currency terms and by 3.8 per cent in rupee terms, sequentially.
Digital revenues at $942 million, formed 31.5 per cent of total revenues, and recorded year-on-year growth of 33.1 per cent and sequential growth of 5.0 per cent in constant currency terms.
For the first nine months of the financial year 2018-19 Infosys’ revenues grew 8.1 per cent in constant currency terms and 16.6 per cent in rupee terms. Infosys also revised upward its FY 19 revenue guidance in constant currency terms to 8.5-9.0 per cent, and said it expects operating margin at 22-24 per cent.
Infosys proposes to buy back shares for not more than Rs800 apiece, a premium of 17 per cent as per today’s closing price, as the cash-rich firm rewards shareholders for the second time in two years. The repurchase will be worth Rs8,260 crore, according to its exchange filing.
Infosys also announced a special dividend of Rs4 per share and fixed 25 January as the record date, and 28 January as the payment date. The payout will be worth about Rs2,107 crore.
As of 30 September, the company had cash and cash equivalents of Rs17,851 crore and current investments worth Rs7,580 crore, according to its filings.
Infosys had announced a payout of Rs 13,000 crore (about $2 billion) through buyback and dividend at the start of financial year 2019 as part of its policy to return 70 per cent of free cash flow.
The company announced its first-ever buyback worth Rs13,000 crore in December 2017 and completed it in February 2018. It had then repurchased 113 million shares at a pre-bonus price of Rs1,150 apiece. The scrip went 1:1 ex-bonus in September last year.
Infosys also revised its FY19 revenue guidance in constant currency (CC) terms to 8.5-9 per cent. The guidance for operating margin (OPM) is retained at 22-24 per cent. 
“With increased client relevance, we saw double digit (10.1%) year-on-year growth in Q3 on a constant currency basis”, said Salil Parekh, CEO and MD. “We also had another strong quarter in our digital business with 33.1 per cent growth and large deals at $1.57 billion which gives us confidence entering 2019,” he added. 
Consolidated attrition declined to 19.90 per cent in Q3FY19 from 22.20 per cent in the previous quarter. “Volume growth was strong and revenue productivity was stable despite Q3 being a seasonally weak quarter. We had good growth across geographies and large business segments”, said Pravin Rao, COO. 
“Attrition declined during the quarter and we are continuing on the path of increased interventions and employee engagements to reduce it further,” said Rao in a release.