Result Analysis-Infosys-23-07-2020


Infosys 1QFY21 Result 1QFY21 4QFY20 1QFY20 YoY (%) QoQ (%)
Revenue 23665 23267 21803 9% 2%
Cost of Sales 15703 15501 14779 6% 1%
Gross Profit 7962 7766 7024 13% 3%
Operating Expenses:
Selling and marketing Expenses 1146 1172 1174 -2% -2%
Administrative Expenses 1451 1667 1379 5% -13%
Total Operating Expenses 2597 2839 2553 2% -9%
Operating Profit 5365 4927 4471 20% 9%
Operating Margin (%) 22.7% 21.2% 20.5% (220) bps (150) bps
Other Income 427 569 696 -39% -25%
Profit before after Tax 5792 5496 5167 12% 5%
Tax 1520 1161 1365 11% 31%
Profit before Minority interest 4272 4335 3802 12% -1%
Net Profit 4233 4321 3798 11% -2%


Result Highlight:

  • Net Profit came at Rs 4,233 cr., a growth of 11.5% YoY and again beat most optimistic expectation on the street.
  • EBIT margin came at 22.7% against 20.5% in the corresponding period of previous year and higher than expectation.
  • More than 200 bps sequential margin improvement in a pandemic affected quarter should be taken positively.
  • USD term revenue de-grew by 2.4% sequentially and flat YoY to $ 3,121 Mn; significantly better than street’s estimate.
  • CC terms revenue de-grew 2% sequentially and grew by 1.5% YoY. Growth in Revenue was not only significantly higher than estimates, it was highest among peers.
  • Digital revenue (45% of the business) grew by whopping 25.5% YoY 4% sequentially to $ 1,389 billion.
  • Among the verticals, Communication, Hitech, Life Sciences reported positive growth sequentially. Again here the quality of growth was broad based and better than TCS which was completely driven by growth in Life Sciences.

Management commentary Highlight:

  • Management reinstated guidance for FY21 and believes that CC revenue will grow by 0-2%.
  • Visibility of business improved compared to the previous quarter and that lead to restoration of guidance.
  • Management believes the business has bottomed out and recovery will be visible going forward.
  • Operating margin is expected to remain in the range of 21-23% and considering the performance of current quarter, we do not see any challenge there.

Segment Commentary:

Communications vertical saw some stability despite severely impacted media segment (due to cancelled events). Management expects 5G rollout to be delayed and therefore remain an overhang on the sector.

BFSI: Saw dip in the early part of the quarter, however performance improved as quarter progressed especially in the US and APAC. Witnessed some softness in the Capital Markets and Credit Card payment segments. Additionally, 0% interest rates to remain an overhang on the sector.

Retail: impacted due to lockdowns and subsequent lower demand in non-grocery, apparel / fashion and restaurants. Non-food CPG: companies saw similar impact. However, pipeline remains robust as clients focus on cost efficiency.



Q1FY21 performance is stable. BFSI, Life sciences & Healthcare and Hi-Tech performed better than expected due to strong execution and deliveries. Deal signings at $1.74 Billion indicate healthy conversion and provide visibility despite uncertainty due to COVID. Salil Parekh has ultimately succeeded at bringing stability and visibility to the company after a rollercoaster of management changes that the company has gone through in the past. It is noteworthy that despite COVID management has guided that Retail pipeline is expected to bounce-back. Healthy FCF and OCF generation (over 100% of net profit) provide additional comfort in uncertain times. We expect that Infosys will be able to deliver better number and guidance in coming quarter.


Elite Wealth Advisors Limited does/does not do business with companies covered in its research reports. Investors should be aware that the Elite Wealth Advisors Limited may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as read more

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