Result Analysis: Infosys Ltd.(CMP: Rs.1388) | Result Update: Q4FY23 |
Infosys Ltd. is the 2nd largest IT sector company being the global leader in consulting, technology, outsourcing and next-generation digital services, enabling clients to create and execute strategies for their digital transformation. It offers services to various sectors comprising BFSI, retail, energy & utilities and communication. Company services a large number of fortune 500 clients which have strong balance sheet. The major revenue generating regions for Infosys are North America and Europe.
Stock Details | |
Market Cap. (Cr.) | 592601.06 |
Equity (Cr.) | 2074.28 |
Face Value | 5 |
52 Wk. high/low | 1759 / 1356 |
BSE Code | 500209 |
NSE Code | INFY |
Book Value (Rs) | 158.95 |
Sector | IT – Software |
Key Ratios | |
Debt-equity: | 0.08 |
ROCE (%): | 39.66 |
ROE (%): | 32.34 |
TTM EPS: | 57.01 |
P/BV: | 8.74 |
TTM P/E: | 25.06 |
Result Highlights:
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Infosys reported results in the Q4 below street expectation with revenue of Rs.37,441 cr., decrease of 2.3% QoQ and net profits of Rs.6,134 cr., decrease of 6.9% QoQ.
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EBIT of the company contracted by 50bps sequentially as well as 50 bps on yearly basis to 21%.
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Among segments communication, BFSI, Hi-tech and Energy &Utilities segment decreased by 6.3%, 3.7%, 3.4% and 2.7% respectively in the quarter on QoQ basis while retail segment showed marginal growth of 1% QoQ.
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Major markets i.e. North America revenue % declined by 100 bps while Europe grew by 120 bps on sequential basis.
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Total Contract Value of Infosys is at $2.1 billion in Q4 Vs $3.3 billion in the previous quarter.
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Attrition rate dropped to 20.9% vs 24.3% of previous quarter; total headcount of the company declined in the Q4 by 3,611 to 3,43,234.
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Board of the company announced a final dividend of Rs.17.50/share for the last quarter.
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In the concall, management highlighted the U.S. banking crisis impacted decisions across board and demand environment remains uncertain.
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The company forecasted slower revenue growth for FY24, expects revenue growth of 4%-7% for the FY24. Operating margin is expected to be in the range of 20-22%
Financial Performance:
Shareholding Pattern:
Particulars | % |
Promoters & Group | 13.18 |
FIIs | 32.59 |
DIIs | 28.56 |
Public | 24.77 |
Others | 0.90 |
Management Commentary:
- Commenting on the December quarter results, Salil Parekh, CEO and MD said, “Our strong performance in FY23 is a testimony to the continued focus on digital, cloud and automation capabilities which resonated with our clients. We have launched exciting programs with our clients leveraging generative AI platforms”
- Nilanjan Roy, Chief Financial Officer said, Our continued focus on cost optimization and operational efficiencies have helped in achieving operating margins of 21.0% in FY23, “Free cash generation in Q4, led by robust collections, was strong. Executing on our capital allocation policy, we successfully completed the share buyback and have proposed a final dividend of `17.50 for FY23”
Outlook:
Infosys reported below the broader estimates results in Q4FY23 majorly due to US banking crisis & unplanned project ramp downs across different sectors. Company has guided the revenue growth of mere 4%-7% for the FY24, which highlights the uncertainties ahead. The TCV pipeline of the company is large and remains strong. However, the uncertainties remains with the overall IT industry as the recession fears prevails for the US and Europe. Hence, we are positive on the Infosys only for a longer term perspective.
Results:
Particulars (In Rs. Cr.) | Q4FY23 | Q3FY23 | Q4FY22 | QoQ% | YoY% | FY23 | FY22 | YoY% |
Revenue from Operations | 37,441 | 38,318 | 32,276 | -2.3% | 16.0% | 1,46,767 | 1,21,641 | 20.7% |
Other Income | 671 | 769 | 637 | -12.7% | 5.3% | 2,701 | 2,295 | 17.7% |
Total Income | 38,112 | 39,087 | 32,913 | -2.5% | 15.8% | 1,49,468 | 1,23,936 | 20.6% |
Employee Benefit Expenses | 20,311 | 20,272 | 16,658 | 0.2% | 21.9% | 78,359 | 63,986 | 22.5% |
Employee benefit Expenses as % of Sales | 54.2% | 52.9% | 51.6% | 130 bps | 260 bps | 53.39% | 52.60% | 79 bps |
Cost of Technical sub-contractors | 3,116 | 3,343 | 3,588 | -6.8% | -13.2% | 1,881 | 1,163 | 61.7% |
Travel Expenses | 426 | 360 | 309 | 18.3% | 37.9% | 1,525 | 827 | 84.4% |
Cost of software packages and others | 2,886 | 3,085 | 2,268 | -6.5% | 27.2% | 10,902 | 6,811 | 60.1% |
Communication Expenses | 171 | 183 | 170 | -6.6% | 0.6% | 713 | 611 | 16.7% |
Consultancy & Professional charges | 387 | 401 | 521 | -3.5% | -25.7% | 1,684 | 1,885 | -10.7% |
Depreciation & Amortisation Expense | 1,121 | 1,125 | 890 | -0.4% | 26.0% | 5,022 | 4,604 | 9.1% |
Other Expense | 1,146 | 1,307 | 916 | -12.3% | 25.1% | 36,796 | 29,980 | 22.7% |
EBIT | 7,877 | 8,242 | 6,956 | -4.4% | 13.2% | 9,885 | 11,774 | -16.0% |
EBIT Margin | 21.0% | 21.5% | 21.6% | -50 bps | -50 bps | 6.7% | 9.7% | -300 bps |
Profit After Tax (PAT) | 6,134 | 6,586 | 7,543 | -6.9% | -18.7% | 33,322 | 30,110 | 10.7% |
PATM (%) | 16.4% | 17.2% | 23.4% | -80 bps | -700 bps | 22.70% | 24.75% | -205 bps |
EPS (In Rs.) | 14.79 | 15.72 | 13.56 | -5.9% | 9.1% | 57.63 | 52.52 | 9.7% |
Segment Revenue (In Rs. Cr.) | Q4FY23 | Q3FY23 | Q4FY22 | QoQ% | YoY% | FY23 | FY22 | YoY% |
BFSI | 10,818 | 11,235 | 10,096 | -3.7% | 7.2% | 43,763 | 38,902 | 12.5% |
Retail | 5,537 | 5,480 | 4,617 | 1.0% | 19.9% | 21,204 | 17,734 | 19.6% |
Communication | 4,411 | 4,710 | 4,132 | -6.3% | 6.8% | 18,086 | 15,182 | 19.1% |
Energy, Utilities, Resources & Services | 4,825 | 4,957 | 3,872 | -2.7% | 24.6% | 18,539 | 14,484 | 28.0% |
Manufacturing | 5,078 | 5,099 | 3,816 | -0.4% | 33.1% | 19,035 | 13,336 | 42.7% |
Hi-Tech | 2,989 | 3,095 | 2,649 | -3.4% | 12.8% | 11,867 | 10,036 | 18.2% |
Life Sciences | 2,681 | 2,695 | 2,140 | -0.5% | 25.3% | 10,085 | 8,517 | 18.4% |
Other Segments | 1,102 | 1,047 | 954 | 5.3% | 15.5% | 4,188 | 3,450 | 21.4% |
Geography Revenue % | Q4FY23 | Q3FY23 | Q4FY22 | QoQ | YoY |
North America | 61.0 | 62.0 | 61.4 | -100 bps | -40 bps |
Europe | 27.0 | 25.8 | 25.2 | 120 bps | 180 bps |
Rest of the World | 9.4 | 9.8 | 10.2 | -40 bps | -80 bps |
India | 2.6 | 2.4 | 3.2 | 20 bps | -60 bps |
Source: Company website, EWL Research
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