Infosys raises Q1 net profit by 3.7% to Rs 3,612 cr, announces 1:1 bonus issue
Bengaluru: Infosys Ltd, India's second-biggest software services exporter, on Friday posted a lower-than-expected 3.7 per cent rise in net profit for the quarter ended on June 30, 2018, due to a one-off charge related to fair value reduction of up-for-sale Panaya business.
The company also announced a surprise element, a 1:1 bonus share - that is one free share for every share held.
The consolidated net profit in April-June at Rs 3,612 crore, or Rs 16.62 a share, was higher than Rs 3,483 crore, or Rs 15.24 a share, net earnings in the same period of the previous fiscal. "Overall, we see a good demand environment across the US, Europe and Asia Pacific. In terms of the sector demand, we see strength in energy, utilities, retail, insurance and manufacturing," Infosys CEO Salil Parekh told reporters here.
On a sequential basis, the profit, however, declined 2.1 per cent from Rs 3,690 crore posted in January-March quarter. Infosys said it accounted for Rs 270 crore reduction in fair value of Panaya business in the quarter.
"On re-measurement, including consideration of progress in negotiations on offers from prospective buyers for Panaya, the company has recorded a reduction in the fair value of Disposal Group held for sale amounting to Rs 270 crore in respect of Panaya. Consequently, profit for the three months ended June 30, 2018, has decreased by Rs 270 crore resulting in a decrease in basic earnings per equity share by Rs 1.24 for the quarter ended June 30, 2018," Infosys said in a statement.
The USD 200 million Panaya buy had been one of the flashpoints between Infosys' high-profile founders led by NR Narayana Murthy and its former management but interestingly, the new Infosys' Board under Chairman Nandan Nilekani's leadership later gave a clean chit to the Panaya deal saying there was no merit in any allegations of wrongdoing.
In April this year, Infosys said it has decided to sell its subsidiary Panaya.
"We had identified that for Panaya and Skava we will explore sale and we started negotiations during this quarter. Based on the progress we have made at this juncture and based on our judgement at this stage, we have taken a reduction in fair value by USD 39 million and the negotiations are still in progress," Infosys CFO MD Ranganath said.