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.1448.85)||Result Update: Q1FY24|
|Market Cap. (Cr.)||601300.63|
|52 Wk. high/low||1672 / 1215|
|Book Value (Rs)||155.26|
|Sector||IT – Software|
The company reported a marginal increase in revenue of 1.3% QoQ to Rs.37,933cr. and a de-growth of 3.1% QoQ in net profit to Rs.5,945 cr. The primary factors contributing to this performance was pain from discretionary spend cuts and delayed ramp-up continues.
EBIT Margin of the company declined by 20 bps QoQ in the quarter and stands at 20.8%, led by increase in Selling and Marketing Expenses (up 7.5% QoQ) during the quarter.
Among segments the YoY growth was led by Manufacturing (up 21.3% YoY in cc terms) and Life Sciences (up 14.9% YoY in cc terms), and E&U (+8.6% YoY).
Across geographies, Europe grew 10.1% YoY, North America grew 2.1% YoY, India grew 13.7% YoY and RoW declined by 0.5% YoY.
With a net new of 56.1%, the large deal TCV for the quarter was $2.3 billion. There were 1,883 active clients (up from 1,872 in Q4FY23).
One $2 billion mega contract was struck after Q1 of FY24, and its execution would scale up by the end of the year.
Utilization (ex-trainees) increased by 110bp QoQ while net employee numbers decreased by 6.9k QoQ. In 1QFY24, attrition (LTM) decreased by 360bp QoQ to 17.3%.
The company claimed that customers are responding well to its generative AI goods and services. Under this area, 80 projects are currently under development. These initiatives include language, text, voice, and video-related services.
|Particulars (In %)||Q1FY23||Q4FY23|
Commenting on the June quarter results, Salil Parekh, CEO and MD said, “We had a solid Q1 with a growth of 4.2% and large deals of $2.3 billion which helps us to set a strong foundation for future growth. Our generative AI capabilities are expanding well, with 80 active client projects. Topaz, our comprehensive AI offering, is resonating well with clients. We see this being transformative for clients and enhancing our overall service portfolio. We have expanded the margin improvement program with a holistic set of actions for the short, medium and long-term, working on five key areas, supported by our leadership team.”
Infosys (INFO) posted muted Q1FY24 results, which were primarily driven by a slowdown in discretionary spending and a ramp-down in project activity. Infosys has also reduced its revenue projection for FY24E from 4-7% to 1-3.5% due to delays in decision-making and the conversion of large projects. OPM outlook retained at 20-22%. The multiyear tech adoption cycle is still largely intact, with cloud and data analytics adoption driving it. Although there has been a slowdown in discretionary tech expenditure in industries like hi-tech, retail, telecom, etc. The total IT industry will continue to be impacted by macro issues related to the financial crisis, and this reduced growth rate will result in low-to-mid single digit revenue growth during FY24/25E.
|Particulars (In Rs. Cr.)||Q1FY24||Q4FY23||Q1FY23||QoQ%||YoY%|
|Revenue from Operations||37,933||37,441||34,470||1.3%||10.0%|
|Employee Benefit Expenses||20,781||20,311||18,337||2.3%||13.3%|
|Employee benefit Expenses as % of Sales||54.8%||54.2%||53.2%||60 bps||160 bps|
|Cost of technical sub-contractors||3,124||3,116||3,909||0.3%||-20.1%|
|Cost of software packages and others||2,720||2,886||2,420||-5.8%||12.4%|
|Depreciation & Amortisation Expense||1,173||1,121||950||4.6%||23.5%|
|EBIT Margin||20.8%||21.0%||20.1%||-20 bps||70 bps|
|Profit After Tax (PAT)||5,945||6,134||5,362||-3.1%||10.9%|
|PATM (%)||15.7%||16.4%||15.6%||-70 bps||10 bps|
|EPS (in Rs.)||14.37||14.79||12.78||-2.8%||12.4%|
|Segment Revenue (In Rs. Cr.)||Q1FY22||Revenue %||Q4FY23||QoQ%||Q1FY23||YoY%|
|Energy, Utilities, Resources, and Services||4,889||12.9%||4,825||1.33%||4,259||14.79%|
|All other segments||1,274||3.4%||1,102||15.61%||940||35.53%|
Disclosure in pursuance of Section 19 of SEBI (RA) Regulation 2014
Elite Wealth Limited does/does not do business with companies covered in its research reports. Investors should be aware that the Elite Wealth Limited may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only information in making their investment decision and must exercise their own judgment before making any investment decision.
For analyst certification and other important disclosures, see the Disclosure Appendix, or go to www.elitewealth.in. Analysts employed by Elite Wealth Limited are registered/qualified as research analysts with SEBI in India.( SEBI Registration No.: INH100002300)
Analyst Certification (For Reports)
Kiran Tahlani, Elite Wealth Limited, email@example.com
The analyst(s) certify that all of the views expressed in this report accurately reflect my/our personal views about the subject company or companies and its or their securities. I/We also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Elite Wealth Limited.
As to each individual report referenced herein, the primary research analyst(s) named within the report individually certify, with respect to each security or issuer that the analyst covered in the report, that:
(1) all of the views expressed in the report accurately reflect his or her personal views about any and all of the subject securities or issuers; and
(2) no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in the report.
For individual analyst certifications, please refer to the disclosure section at the end of the attached individual notes.
This note may include excerpts from previously published research. For access to the full reports, including analyst certification and important disclosures, investment thesis, valuation methodology, and risks to rating and price targets, please visit www.elitewealth.in.
Important disclosures, including price charts, are available and all Elite Wealth Limited covered companies by visiting https://www.elitewealth.in, or e-mailing firstname.lastname@example.org with your request. Elite Wealth Limited may screen companies based on Strategy, Technical, and Quantitative Research. For important disclosures for these companies, please e-mail email@example.com.
Options related research:
If the information contained herein regards options related research, such information is available only to persons who have received the proper option risk disclosure documents. For a copy of the risk disclosure documents, please contact your Broker’s Representative or visit the OCC’s website at https://www.elitewealth.in
All research reports made available to clients are simultaneously available on our client websites. Not all research content is redistributed, e-mailed or made available to third-party aggregators. For all research reports available on a particular stock, please contact your respective broker’s sales person.
Ownership and material conflicts of interest Disclosure
Elite Wealth Limited policy prohibits its analysts, professionals reporting to analysts from owning securities of any company in the analyst’s area of coverage. Analyst compensation: Analysts are salary based permanent employees of Elite Wealth Limited. Analyst as officer or director: Elite Wealth Limited policy prohibits its analysts, persons reporting to analysts from serving as an officer, director, board member or employee of any company in the analyst’s area of coverage.
Country Specific Disclosures
India – For private circulation only, not for sale.
Legal Entities Disclosures
Mr. Ravinder Parkash Seth is the Managing Director of Elite Wealth Ltd (EWL, henceforth), having its registered office at Casa Picasso, Golf Course Extension, Near Rajesh Pilot Chowk, Radha Swami, Sector-61, Gurgaon-122001 Haryana, is a SEBI registered Research Analyst and is regulated by Securities and Exchange Board of India. Telephone: 011-43035555, Facsimile: 011-22795783 and Website: www.elitewealth.in
EWL discloses all material information about itself including its business activity, disciplinary history, the terms and conditions on which it offers research report, details of associates and such other information as is necessary to take an investment decision, including the following:
- a) EWL or his associate or his relative has no financial interest in the subject company and the nature of such financial interest;
(b) EWL or its associates or relatives, have no actual/beneficial ownership of one per cent. or more in the securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance;
(c) EWL or its associate or his relative, has no other material conflict of interest at the time of publication of the research report or at the time of public appearance;
(a) EWL or its associates have not received any compensation from the subject company in the past twelve months;
(b) EWL or its associates have not managed or co-managed public offering of securities for the subject company in the past twelve months;
(c) EWL or its associates have not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
(d) EWL or its associates have not received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
(e) EWL or its associates have not received any compensation or other benefits from the subject company or third party in connection with the research report.
3 In respect of Public Appearances
(a) EWL or its associates have not received any compensation from the subject company in the past twelve months;
(b) The subject company is not now or never a client during twelve months preceding the date of distribution of the research report and the types of services provided by EWL
Provided that research analyst or research entity shall not be required to make a disclosure as per sub-clauses (c), (d) and (e) of clause (ii) or sub-clauses (a) and (b) of clause (iii) to the extent such disclosure would reveal material non-public information regarding specific potential future investment banking or merchant banking or brokerage services transactions of the subject company.
(4) EWL or its proprietor has never served as an officer, director or employee of the subject company;
(5) EWL has never been engaged in market making activity for the subject company;
(6) EWL shall provide all other disclosures in research report and public appearance as specified by the Board under any other regulation