Salil Parekh: How Infosys performed under Salil Parekh as CEO since 2018

NEW DELHI: Infosys, which reappointed Salil S Parekh as CEO and MD till March 31, 2027, has seen its shares rallying 187 per cent, and its market value rising by nearly Rs 4 lakh crore to Rs 6.22 lakh crore from Rs 2.24 lakh crore under Parekh’s tenure so far.

Parekh was made CEO and MD with effect from January 2, 2018.

The average price target on the scrip more than doubled from Rs 1,053 at the time of Parekh joining in 2018 to Rs 2,121 by January 2022, showing the Street’s confidence in the IT major, even after some disappointment over fourth-quarter results resulted in trimming of Infosys average price to Rs 1,964 a piece in the last one month.

By his first earnings call in January 2018, barely 10 days into , Parekh had launched a review structured around market opportunities, client relationships, people dimension and service offering.

He detailed the outcome in the April earnings call, where he talked about four pillars, including scaling the digital services business that represented 25.5 per cent of the company’s revenue in FY18.

In FY22, digital revenues accounted for 59.2 per cent of the company revenues, up from 51.5 per cent in FY21.

Salil also talked about ‘energise core’ by applying intense automation and artificial intelligence to improve productivity, reskilling employees and ‘expand localisation’ in the US by building delivery centers, training centers, and hiring locally in his April 2018 earnings call.

“Salil has taken Infosys back to growth leadership while increasing the longevity of growth courtesy of investments in multiple dimensions of business. Infosys today has settled leadership, localised talent pool, well-rounded portfolio with healthy growing digital business and strong large deal capabilities,” said Kotak Institutional Equities.

Under Parekh, Infosys altered its capital allocation policy in 2019 and announced giving back 85 per cent of its free cash flow to shareholders effective FY20. The company was earlier distributing up to 70 per cent of its free cash flow to its shareholders.

On the earnings front, the IT major surprised Street in seven, disappointed in two and produced in-line quarterly results on three occasions in the last three years. That included the March quarter’s disappointment. The company logged a compounded annual growth rate of 9 per cent in consolidated profit and 13.1 per cent in total revenues during the three-year period.

As far as Parekh’s tenure is concerned, the annual consolidated total revenue for the IT firm rose from Rs 73,715 crore in FY18 to Rs 1,23,936 crore in FY22, while the consolidated net profit grew to Rs 22,112 crore in FY from Rs 16,029 crore in FY18.

The Infosys management has guided for revenue growth of 13–15 per cent for FY23 and a margin band of 21–23 per cent, which some analysts found conservative.

Parekh in an interview with ET NOW this month said “Growth is a function of what we have already been in contract with, which are very strong large deals, nine-and-a-half billion and what we see in the future is very strong uptake. You might also have noticed last quarter we had 22,000 new employees join us. So we are definitely building for good growth this year.”

“What we see is that digital work is massive, so as long as we build the capability on digital and cloud, we feel that we will continue to do well,” the Infosys CEO said.

For now, 24 analysts have a strong buy, 8 buy, 6 hold, 1 sell and 1 strong sell recommendation.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)