Result Analysis: Infosys Ltd. Result Update Q3FY22


Particulars (In ₹. Cr) Q3FY22 Q2FY22 Q3FY21 QoQ % YoY%
Revenue From Operation 31867.00 29602.00 25927.00 7.65% 22.91%
Other Income 512.00 524.00 611.00 -2.29% -16.20%
Total Income 32379.00 30126.00 26538.00 7.48% 22.01%
Employee Expenses 16355.00 15743.00 14097.00 3.89% 16.02%
Employee Cost as % of Revenue 51.32 53.18 54.37 -3.50% -5.61%
Operating Profit 7484.00 6589.00 6589.00 13.58% 13.58%
Operating Profit Margin 23.49% 22.26% 25.41% 5.51% -7.59%
PAT 5809.00 5421.00 5197.00 7.16% 11.78%
PAT Margin 18.23% 18.31% 20.04% -0.46% -9.06%
Basic EPS (in Rs. ) 13.86 12.23 13.10 13.33% 5.80%
Business Segment Q3FY22 Q2FY22 Q3FY21 QoQ % YoY%
Financial Services 10023 9566 8578 4.78% 16.85%
Retail 4612 4330 3801 6.51% 21.34%
Communication 3979 3668 3215 8.48% 23.76%
Energy, Utilities 3740 3501 3251 6.83% 15.04%
Manufacturing 3598 3219 2416 11.77% 48.92%
Hi-Tech 2567 2511 2130 2.23% 20.52%
Life Sciences 2383 2103 1827 13.31% 30.43%
Others 965 704 709 37.07% 36.11%
Geographical Segment Q3FY22 Q2FY22 Q3FY21 QoQ % YoY%
North America 19693.81 18323.64 15971.03 7.48% 23.31%
Europe 7934.88 7341.30 6222.48 8.09% 27.52%
Rest of the world 3282.30 3167.41 3059.39 3.63% 7.29%
India 956.01 769.65 674.10 24.21% 41.82%

Result Highlight: 

  • Infosys Consolidated Revenue rose 65% QoQ and 22.91% YoY to ₹ 31867 crore – higher than the estimates of ₹ 30940 Crore. Other income fall 2.29% QoQ to₹512 Crore.

  • Operating Profit Margin contracted to 49% from 25.41% last quarter due to the lack of wage hike.

  • Net profit rose 11.78% YoY to ₹5809 crore for the December quarter compared with ₹ 5197 crore in the same quarter last Reported strong free Cash flow of ₹ 5399 Cr in Q3.

  • Attrition rate continues to be very high at 25.5%.

  • All Verticals Grow 10%+ YoY; digital growth Y-o-Y is 42.6%, digital revenue at 58.5% of total revenue.

  • All major markets showed strong growth, with growth led by North America (+23.3%). Europe (+27.52%), India (+41.82%) and Rest of World (+7.29%).

  • Growth remained broad-based and deal momentum was robust, with digital transformation rapidly scaling across verticals and regions. Large deal wins accelerated with TCV of $2.53 billion in Q3.

  • Infosys has revised their revenue guidance to 19.5 to 20% from the earlier 16.5 to 17.5% range.

Management commentary:

  • Salil Parikh MD and CEO of the company said “Our strong performance and market share gains are a testament to the enormous confidence our clients have in us to help them in their digital transformation. This stems from four years of sustained strategic focus on areas of relevance for our clients in digital and cloud, continued re-skilling of our people, and deep relationships of trust that our clients have with us. This is reflected in an upgrade in our revenue guidance to 19.5%-20.0% for FY22. We expect the healthy technology spend to continue with large enterprises progressing on their digital transformations”,

  • Nilanjan Roy after 3rd quarter said “Despite the cost escalations driven primarily by supply side challenges, Infosys delivered another quarter of healthy margins, with improved cost optimization, continued operating leverage and a stable pricing environment”, They continue to prioritize investments in talent acquisition and development and have further increased our global graduate hiring program to over 55,000 for FY22 to support our growth ambitions”

  • Guidance: Infosys raised its constant currency guidance from 16.5-17.5 percent for FY22, to 19.5-20 percent. However, it maintained the guidance for EBIT margin at 22-24 percent.

  • Operating margin was resilient at 23.5%, despite wage hike by the company. The company’s long-term cost structures are well placed to maintain margins.

  • Infosys’ margins were down 10bps QoQ. While subcontracting costs (+70bps of revenues) dragged margins, employee costs (-190bps) supported margins, possibly due to fresher hiring. It is surprising that Infosys has managed to report a 4% decline in average employee costs in 30 despite high attrition. Sharp rise in pass through costs possibly due to ramp up of Daimler deal offset the employee cost savings.

  • Infosys continue to prioritise investments in talent acquisition increased their global graduate hiring programme to over 55,000 for FY22.


Infosys Q3FY22 result was better than expected on all front, Revenue grew 22.91% and Profit growth came in at 11.78% on YoY basis and with digital contributing 5% of the total revenue margin are expected to be maintain in coming years, EBIT margin decline was restricted to 200 basis point YoY basis but improved QoQ basis despite multiple headwind of wage revision The Deal value of the company is broad based across markets and verticals with $2.53 billion in this quarter. Infosys services attrition rate still continues to be very high when compared to the industry and this quarter Attrition came at 25.5%. As demand environment continues to be strong with deal pipeline increasing every quarter, Infosys raised FY22 revenue guidance to 19.5-20% YoY CC from 16.5-17.5%. We believe margin may come under little pressure due to wage hike and incentive to retain employee, travelling cost and as employee come back to office, but focus on high margin digital business will offset cost increase Infosys investment in cloud and digital business. The company is seeing healthy traction in cloud, cybersecurity and experience. This coupled with healthy client mining, winning large deals, healthy pipeline, multi-year tech growth and increase in hiring to 55000 fresher all indicate strong revenue growth in coming quarters. At the CMP of ₹1877, Infosys is trading at PE multiple of 32x. Valuing the company at 34x FY23E EPS, we recommend buy on Infosys at CMP of for the Target Price of ₹ 2120.

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