Result Analysis Infosys Limited

Infosys (INFY) is a global leader in next-generation digital services and consulting. Over 300,000 people of the company work to amplify human potential and create the next opportunity for people, businesses and communities. The company enables clients in more than 56 countries to navigate their digital transformation. With over four decades of experience in managing the systems and workings of global enterprises, it expertly steers clients, as they navigate their digital transformation powered by the cloud. The company enables them with an AI-powered core, empower the business with agile digital at scale and drive continuous improvement with always-on learning through the transfer of digital skills, expertise, and ideas from our innovation ecosystem.

Result Analysis:  Infosys Limited (CMP: Rs.1464.55)

Result Update: Q2FY24

Outlook:

Infosys posted largely in-lined Q2FY24 results with 2.3% QoQ increase in the revenues in CC terms along with expansion in operating margins by 40 bps. A record-breaking four megadeals were won during the quarter, resulting in the largest deal TCV ever at USD7.7b (48% new).  Despite good results, company trimmed the upper end of its FY24 revenue growth guidance by 100bp to 1.0-2.5% YoY CC, on account of lower volume and low discretionary spending. We remain positive on the Infosys as it is expected to benefit significantly from the increase in IT spending in the medium to long term, regardless of near-term weakness.

Results:

 

Particulars (In Rs. Cr.)	Q2FY24	Q1FY24	Q2FY23	QoQ%	YoY%	H2FY24	H2FY23	YoY%
Revenue from Operations	38,994	37,993	36,538	2.6%	6.7%	76,927	71,008	8.3%
Other Income	632	561	584	12.7%	8.2%	1,193	1,260	-5.3%
Total Income	39,626	38,554	37,122	2.8%	6.7%	78,120	72,268	8.1%
Employee Benefit Expenses	20,796	20,781	19,438	0.1%	7.0%	41,577	37,776	10.1%
Employee benefit Expenses as % of Sales	53.3%	54.7%	53.2%	-140 bps	10 bps	54.0%	53.2%	0.8%
Cost of technical sub-contractors	3,074	3,124	3,694	-1.6%	-16.8%	6,198	7,603	-18.5%
Cost of Software packages and others	3,387	2,720	2,512	24.5%	34.8%	6,106	4,932	23.8%
Depreciation & Amortisation Expense	1,166	1,173	1,029	-0.6%	13.3%	2,339	1,979	18.2%
Other Expense	2,297	2,244	1,992	2.4%	15.3%	4,542	2,834	60.3%
EBIT	8,274	7,951	7,873	4.1%	5.1%	16,165	15,884	1.8%
EBIT Margin (%)	21.2%	20.9%	21.5%	30 bps	-30 bps	21.0%	22.4%	-140 bps
PAT	6,215	5,945	6,026	4.5%	3.1%	12,160	11,388	6.8%
PAT Margin (%)	15.9%	15.6%	16.5%	30 bps	-60 bps	15.81%	16.04%	-20 bps
EPS (in Rs.)	15.01	14.37	14.35	4.5%	4.6%	29.38	27.13	8.3%

Segment Revenue (In Rs. Cr.)	Q2FY24	Q1FY24	Q2FY23	QoQ%	YoY%	Revenue %
Financial Services	10,705	10,661	11,148	0.4%	-4.0%	27.5%
Retail	5,913	5,513	5,183	7.3%	14.1%	15.2%
Communication	4,463	4,441	4,501	0.5%	-0.8%	11.4%
Energy, Utilities, Resources and Services	4,957	4,889	4,498	1.4%	10.2%	12.7%
Manufacturing	5,574	5,350	4,686	4.2%	19.0%	14.3%
Hi-Tech	3,053	3,056	2,971	-0.1%	2.8%	7.8%
Life-Sciences	3,050	2,749	2,452	10.9%	24.4%	7.8%
Others	1,279	1,274	1,099	0.4%	16.4%	3.3%

Geography Revenue %	Q2FY24	Q1FY24	Q2FY23	QoQ	YoY
North America	61.1	60.8	62.5	30 bps	-140 bps
Europe	26.5	26.8	24.7	-30 bps	180 bps
Rest of the World	9.6	9.7	9.9	-10 bps	-30 bps
India	2.8	2.7	2.9	10 bps	-10 bps

Source: Company website, EWL Research

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