Bengaluru: India's second largest IT firm Infosys on Friday reported a 30 per cent drop in its December quarter net profit on higher expenses even as it approved a Rs 8,260-crore share buyback - the second in less than 13 months' time.
Infosys Q3 net falls 30 percent on higher expenses
Its net profit slumped to Rs 3,610 crore in October-December 2018 from Rs 5,129 crore in the same period a year ago, the company said in a statement. In spite of the drop in quarterly profit, the company raised its revenue growth forecast for the fiscal year ending March 2019 to 8.5-9 per cent in constant currency terms, from 6-8 per cent previously.
A company can hold a share repurchase programme only once a year. Infosys also declared a special dividend of Rs 4 per share. In its maiden buyback, Infosys had returned around Rs 13,000 crore to the shareholders by purchasing stock at Rs 1,150 per piece.
The share buyback and the special dividend are part of Infosys' capital allocation policy outlined in April 2018 for returning the surplus of about Rs 13,000 crore to shareholders. Payment of special dividend would entail a payout of about Rs 2,107 crore and another Rs 8,260 crore would be spent on share buyback.
"With increased client relevance, we saw double-digit (10.1 per cent) year-on-year growth in Q3 on a constant currency basis," Infosys CEO and MD Salil Parekh said. Parekh -- who has completed a year in his role -- said the company also had another strong quarter in its digital business with 33.1 per cent growth and large deals at $1.57 billion, which gives it confidence entering 2019.
Sanjeev Hota, AVP Research at Sharekhan by BNP Paribas, Infosys' performance surprised positively with strong top-line growth for the quarter, though margin performance missed the mark. "Increase in revenue guidance and better exit rate for FY19 provides comfort on double digit growth in FY20. Buyback quantum seems to be below than expectation, however, will support the stock performance in medium term," he added.
Larger rival, Tata Consultancy Services had posted 24.1 per cent growth in its December quarter net income at Rs 8,105 crore (its highest ever) and guided towards a healthy 2019 saying it has a "strong" order pipeline.