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|
|Market Cap. (Cr.)||607844.50|
|52 Wk. high/low||1672 / 1215|
|Book Value (Rs)||155.25|
|Sector||IT – Software|
Infosys reported above street estimates results in Q2FY24; revenue increased by 2.6% QoQ to Rs.38,994 cr. and PAT increased by 4.5% QoQ to Rs.6,215 cr. The primary factors contributing to this performance was lower discretionary spending and delays in decision-making.
EBIT Margin of the company improved by 30 bps QoQ and stands at 21.2%, led by decrease in employee cost and technical sub-contractors’ cost.
Among segments, BFSI had a negative impact on vertical growth, although the retail and manufacturing verticals were resilient. BFSI (major contributing segment in the total revenue) showed the slight growth of 0.4% QoQ while Manufacturing, Retail and Life Sciences grew 4.2%, 7.3% and 10.9% respectively.
TCV of the company stands at eight-quarter high at $7.7 bn. vs $2.3 bn. in Q1 with a book to bill ratio of 1.6x.
With a net addition of -7,530 employees, company saw negative staff addition for the quarter. The attrition rate dropped from 17.3% to 14.6%. The management has guided for the slow hiring as the majority of the ramp up is hampered by the delay in discretionary spending.
Company has trained over 57K personnel in general artificial intelligence (Gen AI) and is currently developing 90 Gen AI programs. It is developing both open source and exclusive Gen AI models for its own internal efficiency enhancement as well as for clients.
The management reduced revenue growth guidance range for FY24 to 1%-2.5% (from 1%-3.5%) in CC terms. However, its margin guidance stands at 20%-22%.
- Infosys has announced an interim dividend of Rs.18 per share.
Commenting on the September quarter results, Salil Parekh, CEO and MD said, “We had our highest large deals value at $7.7 billion in Q2 spread across all verticals and geographies. This, in an uncertain macro-environment, is a testament to our ability to pivot and stay relevant to the evolving client needs, by delivering the benefits of transformation as well as productivity and cost savings at scale”,
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.
|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%|
|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%|
|EBIT Margin (%)||21.2%||20.9%||21.5%||30 bps||-30 bps||21.0%||22.4%||-140 bps|
|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 %|
|Energy, Utilities, Resources and Services||4,957||4,889||4,498||1.4%||10.2%||12.7%|
|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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