IGI Logo

Result Synopsis

Infosys (INFO) reported broadly inline performance for the quarter. Both, the sequential revenue growth and EBIT margin were inline with expectation. It reported increase in revenue by 1% QoQ in cc terms. Revenue grew by 1.4% QoQ in USD terms (up 1.4% QoQ in INR terms). EBIT margin declined by 24 bps QoQ to 20.8% on higher SG&A cost in the quarter. There was some moderation in employee attrition as LTM attrition was down 360 bps QoQ to 17.3%. Large deal wins were strong at $2.3bn

The multiyear tech adoption cycle broadly remains intact led by adoption of cloud and data analytics. However, the clients remain cautious regarding the evolving macroeconomic situation in the US and Europe and there has been slowdown in discretionary tech spending in sectors such as Hitech, Retail, Telecom, etc. and it continues to impact near term revenue performance. Management has lowered FY24E revenue growth guidance to 1 to 3.5% in cc terms from earlier guidance 4 to 7% on account of near term demand concerns. Employee attrition has started moderating and should support operating margin going ahead. We estimate revenue CAGR of 10.8% over FY23?25E with average EBIT margin of 21.8%. We maintain our BUY rating on the stock with revised target price of Rs 1,742/share at 24.0x on FY25E EPS. The stock trades at PER of 23.8x/19.9x on FY24E/FY25E EPS.

Result Highlight

* Reported revenue of Rs 379.3bn (up 1.3% QoQ in INR terms, up 1.4% QoQ in USD terms) led by growth in Manufacturing, Hitech and Other verticals. The revenue increased by 1.0% QoQ in cc terms. In terms of verticals, the YoY growth was led by Manufacturing (up 21.3% YoY in cc terms) and Life Sciences (up 14.9% YoY in cc terms).

* EBIT margin dipped by 24 bps QoQ to 20.8%, led by increase in Selling and Marketing Expenses (up 7.5% QoQ) during the quarter.

* Reported Large deal wins of $2.3bn vs $2.1bn in Q4FY23.

* Gross client addition was 99 vs 115 in Q4FY23. Days sales outstanding increased to 63 days vs 62 in Q4FY23.

* Offshore effort mix was down 10 bps QoQ to 75.3%. Added (6,940) employees in the quarter to close at 3,36,294 employees. LTM attrition was down 360 bps QoQ to 17.3%. Utilization (excluding trainees) was up 110 bps QoQ to 81.1%.

* FY24 revenue guidance revised to 1.0%-3.5% and operating margin guidance retained at 20%-22%.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632

Above views are of the author and not of the website kindly read disclaimer