Back
PremiumInfosys Q4 Results 2023 Live: Infosys reported a sequentially weak quarter in the period ending March 31, 2023 (Q4FY23). The IT giant's Q4 PAT came in at ₹6,128 crore down by nearly 16% QoQ. While revenue also dipped by 2.2% QoQ to ₹37,441 crore. In constant currency, the company's revenue growth came in at 3.2% QoQ and 8.8% YoY. The operating margin stood at 21% in Q4. The company also declared a final dividend of ₹17 per share for FY23. Infosys' rival TCS has also missed street's estimates in Q4.
The next major Q4 earnings will be of the largest private sector lender HDFC Bank on Saturday. The fourth quarterly earnings are seen to be steady for the lender.
Read here: HDFC Bank Q4 preview
Infosys' overall operating performance was below expectations in fourth quarter of FY23. The company announced its Q4 results after market hours on Thursday. Markets will be closed on Friday, and trading will resume on Monday next week.
Now that Infosys has missed its quarterly estimates, how will the company's stock price react? Read here
Urmi Shah, Research Analyst, SAMCO Securities:
Infosys reported a disappointing set of numbers this earnings season, way below their FY23 guidance. The company reported the worst decline in a decade in constant currency growth. Resultantly, the margins have seen a decline. The company’s FY24 constant currency revenue growth guidance of 4%-7% as against the current 15% indicates that the uncertainty continues. They saw an unplanned ramp-down in projects across business verticals due to the fickle market sentiment. The employee cost has, and hence, the margins were expected to normalise with slow hiring and attrition normalising but the management guidance sounds cautious about the same.
The increasing order book and decreasing attrition remain two key rays of growth for the coming quarter.
Infosys expects revenue growth to be in the range of 4-7% in constant currency for the financial year 2023-24. While operating margins are expected to be in the range of 20-22%.
Read here: Infosys FY24 guidance: Company sees revenue growth at 4-7% in constant currency, margins at 20-22%
Two IT giants Tata Consultancy Services (TCS) and Infosys have announced their fourth quarter earnings for FY23. Both tech biggies missed Street's estimates for the quarter. Among the positives would be large deal wins and a sharp decline in attrition rate in Q4 for both companies, however, broadly the performance elevated uncertainty ahead.
Read here: TCS vs Infosys: Hiring, dividends, order books among 5 key things to compare in Q4FY23
As per TD Cowen report, Infosys posted lower-than-expected 4Q results with revenue/EPS missing consensus by -3%/-5% and an initial outlook on growth (4-7% y/y CC) and OM (20-22%) that also miss the mark. Unplanned project ramp-downs and delayed decision-making across telecom, BFSI, Hi-tech, Retail, with more weakness in US were conveyed due to broader macro uncertainty.
Manish Chowdhury, Head of Research at Stoxbox said:
Infosys posted a dismal set of numbers in the fourth quarter, with all parameters coming below market expectations. Revenue in CC terms declined 3.2% sequentially, against expectations of a flattish growth, while margins were also under pressure at 21%. The FY23 revenue guidance miss along with sub-par FY24 guidance clearly shows that the global weak macroeconomic environment is weighing on the company’s performance, with discretionary projects taking a backseat and decision-making cycle becoming longer. It would be interesting to see how the company steers through this difficult phase, especially against the backdrop of the demand weakening becoming more broad-based across business verticals.
Infosys said, it returned about 86% of Free Cash Flow to shareholders under capital allocation policy. This included a dividend payout of ₹14,200 crore and buyback plan of ₹9,300 crore.
Infosys has announced a final dividend of ₹17.50 per share for FY23. Earlier, it paid ₹16.50 per share. Together, Infosys paid a total of ₹34 per equity share in FY23 -- rising by 9.7% from the previous fiscal FY22.
Read here: Infosys declares final dividend of ₹17.5 per share for FY23. Know record, ex-dividend, payment dates
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.
He added, “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."
As per the financial results data, Infosys headcount stand at 3,43,234 by end of March 2023 quarter --- which means -- the company let go of 3,611 employees in the three months period.
The headcount stood at 3,46,845 employees in December 2022 quarter.
On year-on-year, the company's headcount increased by 29,219 employees versus a total count of 3,14,015 employees in Q4FY22.
Infosys continued to record steep contraction in its attrition rate for LTM-IT services. In Q4, the attrition rate stood at 20.9% --- steeply down from 24.3% in Q3FY23 and 27.7% in the same quarter last year.
1. In rupee terms, revenue dropped 2.2% QoQ but was up by 16% YoY.
2. Revenues in CC terms grew by 8.8% YoY and declined by 3.2% QoQ.
3. Operating margin at 21.0%, decline of 0.6% YoY and 0.5% QoQ.
4. PAT stood at ₹6,128 crore down by nearly 16% QoQ but up by nearly 6% YoY.
5. Basic EPS at ₹14.79, growth of 9.0% YoY.
6. FCF at ₹5,844 crore, growth of 1.3% YoY. FCF conversion at 95.3% of net profit.
7. Continuing the recent trend, attrition declined further in Q4 to 20.9%.
Salil Parekh, CEO and MD of Infosys 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."
He added, “As the environment has changed, we see strong interest from our clients for efficiency, cost and consolidation opportunities, resulting in a strong large deal pipeline. We have expanded our internal program on efficiency and cost to build a path to higher margins in the medium term. We continue to invest in our people and in supporting our clients."
The company has declared a dividend of ₹17.50 per share for the fiscal year FY23. It fixed June 2nd as the record date to determine eligible shareholders for the dividend benefits.
Infosys said, the dividend will be paid on July 3rd, 2023.
On a sequential basis, the company's revenue dipped by 2.2% to ₹37,441 crore in Q4FY23. Infosys had posted a revenue of ₹38,318 crore in Q3FY23.
However, revenue was up by 16% from ₹32,276 crore in Q4 of the previous fiscal.
Infosys posted a consolidated net profit of ₹6,128 crore in Q4FY23, down by 15.68% from a PAT of ₹7,283 crore in the preceding quarter.
However, latest PAT jumped by 7.8% from ₹5,686 crore in Q4 of FY22. The profits are attributable to the owners of the company.
Ahead of Infosys' earnings, the Nifty IT index nosedived by 637.50 points or 2.2% to end at 28,342.80. All stocks on the index were in the red.
LTI Mindtree stock was the top loser, plunging by nearly 4% followed by Persistent Systems and Infosys which tumbled by over 3.1% and 3.2% respectively on the index.
Mphasis was down by 2.8%, while Tech Mahindra and HCL Tech dipped by 2.2% and 2.01%. IT giant TCS slipped by 1.53%. Other stocks like Wipro, Coforge, and LTTS were down over 1% each.
The second largest IT firm in terms of market share, Infosys closed at ₹1,388.60 apiece down by ₹39.85 or 2.79% on BSE. The stock is near its day's low of ₹1,383.60 apiece.
The stock was under pressure ahead of its Q4 results.
Notably, Infosys stock neared its 52-week low of ₹1,355.50 apiece.
Watch out for: FY24 guidance update. Commentary on deal wins and margins will be key monitorable
Shares of IT services major Infosys dipped 3.14 per cent to settle at ₹1,383.40 apiece in Thursday's trade.
The IT major's consolidated revenue is likely to come in at ₹38,859 crore, a 20.4 per cent year-on-year growth. Net profit may see an increase 16.5 per cent on-year to ₹6,623 crore.
In constant currency (CC) terms, analysts predict revenue growth ranging from 0.3 per cent to 0.6 per cent QoQ.
If you look at the first half seasonality in any given year, then Infosys QoQ growth in the first half of any financial year is better than TCS. So, from that perspective, in the near term quarter we will see a slightly better growth at Infy than at TCS, Sumeet Jain of ICICI Securities told ET Now.
The high-weightage IT lost more than 1.8%, with nine of the 10 firms in the index logging losses. TCS, Tech Mahindra Ltd, HCL Tech Ltd and Infosys Ltd fell more than 1.5% each, and were among the top losers in Nifty 50 index.
Domestic brokerage ICICI Securities suggested a target price of ₹1,759 on Infosys shares, while HDFC Institutional Equities has a target price of ₹1,830 on the stock.
The average target of ₹1,720 on the stock, according to data from Trendlyne, implying a 23 per cent upside potential on the counter.
The script was trading 2.78 per cent lower at ₹1,388.55 per share during noon deals.
1) Tech budgets by clients; 2) Impact on BFSI in US & Europe 3) Large deal pipeline and wins; 4) Impact on discretionary spends, 5) Attrition level and trends 6) Margin outlook, 7) Outlook on Telecom, retail, BFSI & Hi-tech verticals, 8) IT budget allocation, and 9) Attrition.
“We would closely watch for the company’s commentary relating to deal wins, pricing environment, attrition levels, headcount additions and any fallout on their BFSI and discretionary spending verticals post the recent banking crisis in the US and Europe," said Manish Chowdhury, Head of Research at Stoxbox.
Investors expect Infosys to report muted revenue growth of 0.1-0.2% quarter-on-quarter (QoQ) in constant currency terms. "We expect 25 bps sequential decline in EBIT margin with headwinds from visa costs (40 bps) partially offset by operational efficiencies and lower passthrough expense," Kotak Institutional Equities said, adding that deal TCV and pipeline will take centerstage.
Infosys would announce its quarterly earnings after market hours today, which would be followed by a press conference at 4:30 pm and a 60-minute earnings call at 6 pm.
Weak trends were also witnessed in other IT counters, with Infosys, Tech Mahindra, HCL Technologies and Wipro trading lower in morning trade.
Shares of IT services major Infosys tanked more than 2 per cent ahead of its March quarter results on Thursday.
Download the App to get 14 days of unlimited access to Mint Premium absolutely free!
Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!
Let’s get started
