Result-Analysis-Elite-Wealth.

Result-Analysis

Result Analysis: Infosys Ltd. Result Update Q2FY22

 

Particulars (In ₹. Cr.) Q2FY22 Q1FY21 Q2FY21 QoQ % YoY%
Revenue from Operations 29602 27896 24570 6.12% 20.48%
Other Income 524 622 570 -15.76% -8.07%
Total Income 30126 28518 25140 5.64% 19.83%
Employee Benefit Expenses 15743 15230 13400 3.37% 17.49%
Employee benefit Expenses as % of Sales 53.18% 54.60% 54.54% -2.59% -2.49%
Operating profit 6972 6,603 6228 5.59% 11.95%
Operating Margin 23.55% 23.67% 25.35% -0.50% -7.08%
Profit After Tax 5,421 5,195 4,858 4.35% 11.59%
PATM (%) 18.31% 18.62% 19.77% -1.66% -7.38%
EPS (in Rs. ) 12.85 12.21 11.4 5.24% 12.72%
Segment Revenue Q2FY22 Q1FY21 Q2FY21 QoQ % YoY%
BFSI 9,566 9,217 7,871 3.79% 21.53%
Manufacturing 3,219 2,702 2,241 19.13% 43.64%
Retail and – Consumer Business 4,330 4,175 3,651 3.71% 18.60%
Energy 3,501 3,371 3,027 3.86% 15.66%
Communication, Media and Technology 3,668 3,403 3,093 7.79% 18.59%
Hi- Tech 2,511 2,310 2,244 8.70% 11.90%
Life Sciences and Healthcare 2,103 1,891 1,672 11.21% 25.78%
Others 704 827 771 -14.87% -8.69%

Result Highlight:

  • Infosys Consolidated Revenue rose 12% QoQ and 20.48% YoY to ₹ 29602 crore – higher than the estimates of ₹ 29570 Crore. Other income fall 15.76% QoQ to₹524 Crore.

  • Operating Profit Margin contracted to 55% from 23.67% last quarter due to the lack of wage hike.

  • Net profit rose 11.59% YoY to ₹5421 crore for the September quarter compared with ₹ 4858 crore in the same quarter last Reported strong free Cash flow of ₹ 5272 Cr in Q2.

  • Attrition rate continues to be very high at 20.1%.

  • All Verticals Grow 10%+ YoY; digital growth Y-o-Y is 42.7%, digital revenue at 56.1% of total revenue.

  • All major markets showed strong growth, with growth led by North America (+23.1%). Europe (+22.8%), India (+4.2%) and Rest of World (+8.3%).

  • The company won 22 deals worth $2.15 billion in the July-September period, compared with $2.6 billion in the previous quarter.

  • The company approved an interim dividend of ₹ 15 per

  • Company Announce merger of WongDoody Holding Company, Inc. (“WHC”) and WDW Communications, Inc. (WDW) with WongDoody, Inc. (WDI). WHC is a wholly owned subsidiary of Infosys Limited and WDW and WDI are wholly owned subsidiaries of WHC. Post-merger, Infosys Limited will be issued shares in WDI in lieu of shares in WHC. The merger would be accounted for at carrying value and will not have any impact on the financial statements.

Management commentary: 

  • Salil Parikh MD and CEO of the company said “Our stellar performance and robust growth outlook continue to demonstrate our strategic focus and the strength of our digital offerings. As we witness a strong market opportunity with global enterprises rapidly accelerating their digital journeys, our sustained investments in expanding capabilities, including the differentiated cloud play, Infosys CobaltTM, has uniquely positioned us to continue serving our clients effectively, gain market share and emerge as the preferred cloud and digital transformation partner in the market.”

  • Pravin Rao, Chief Operating Officer , said: “have been able to meet client requirements without any issue, undertaken several initiatives for attrition rolled out skilled based compensation, have started requesting senior leaders to come to office at least once a week”. In order to harness the full potential of the market opportunity, we are expanding our college graduates hiring program to 45,000 for the year. Simultaneously, we continue to strengthen employee value proposition including health and wellness measures, reskilling programs, appropriate compensation interventions and enhanced career growth opportunities”

  • Nilanjan Roy after 2nd quarter said operating margins for Q2 were resilient; the impact of enhanced employee value proposition initiatives was offset by strong operating parameters, cost optimization and operating leverage, will continue to invest in employees to remain a preferred employer-of-choice and seamlessly fulfill client demand”, Cash generation remained robust.
  • Guidance: Infosys raised its constant currency guidance to 16.5-17.5 percent for FY22, from 14-16 percent. However, it maintained the guidance for EBIT margin at 22-24 percent.

  • Operating margin was resilient at 23.6%, despite wage hike by the company. The company’s long-term cost structures are well placed to maintain margins.

  • Infosys recently launched Infosys Equinox to help enterprises securely deliver hyper-segmented, personalized Omni channel commerce experiences for B2B and B2C buyers

  • CEO on Income Tax portal said we are seeing steady progress on the income tax system. As of yesterday we had over 1.9 crore returns that have been filed using the new system and is confident of ensuring a seamless experience for all the taxpayers. 

 OUTLOOK

Infosys Q2FY22 result was better than expected on all front, Revenue grew 20.48% and Profit growth came in at 11.59% on YoY basis and with digital contributing 56% of the total revenue margin are expected to be maintain in coming years, EBIT margin decline was restricted to 10basis point qoq despite multiple headwind of wage revision The Deal value of the company is broad based across markets and verticals with $2.15 billion in this quarter. Infosys services attrition rate still continues to be very high when compared to the industry. As demand environment continues to be strong with deal pipeline increasing every quarter, Infosys raised FY22 revenue guidance to 16.5-17.5% YoY CC from 14-16%. We believe margin may come under little pressure due to wage hike, 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 sales is paying off. 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 45000 fresher all indicate strong revenue growth in coming quarters. At the CMP of ₹1709, Infosys is trading at PE multiple of 31x. Valuing the company at 32x FY23E EPS, we recommend buy on Infosys at CMP of for the Target Price of ₹ 2050.

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)
Disclosure Appendix
Analyst Certification (For Reports)
Israil Khan, Elite Wealth Limited, suhail@elitewealth.in
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.
Research Excerpts
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.
Company-Specific Disclosures
Important disclosures, including price charts, are available and all Elite Wealth Limited covered companies by visiting https://www.elitewealth.in, or emailing research@elitestock.com 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 research@elitestock.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
Other Disclosures
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:
1. Reports
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;
2. Compensation
(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

FILING COMPLAINTS ON SCORES - EASY & QUICK

a. Register on SCORES portal

b. Mandatory details for filing complaints on SCORES:
i. Name, PAN, Address, Mobile Number, E-mail ID

c. Benefits:
i. Effective communication
ii. Speedy redressal of the grievances

SEBI : https://www.scores.gov.in/scores/complaintRegister.html