Infosys Q4 profit falls, misses market estimates; revenue inches up

Infosys Ltd, India’s second-largest software services provider, reported a 2.1% fall in consolidated net profit to Rs 5,686 crore for the January-March quarter from Rs 5,809 crore in the October-December period.

The company missed most of the estimates given by brokerages for its bottom line. Among the most pessimist, Kotak Institutional Equities had forecast a profit of Rs 5,754 crore. The most optimistic projection was Rs 6,010 crore by Emkay Global Financial Services.

The Bangalore-based company’s revenue from operations grew 1.3% to Rs 32,276 crore from Rs 31,867 crore in October-December. This again missed most of the estimates that were all above Rs 32,500 crore.

The operating margin contracted by 300 basis points to 21.5% from a year ago.

The company has guided for a sales growth of 13-15% in FY23 and margins at 21-23%.  In FY22, revenues grew 19.7% in constant currency terms and 20.3% in dollar terms to $1.63 billion.

The company won deals worth $2.3 billion in January-March and $9.5 billion in the whole of the financial year. 

Other Key Highlights

1) Basic earnings per share was at $0.70 in FY22, a growth of 14.3% over the preceding year.

2) Free cash flow was $3.05 billion in FY22, a growth of 2.8% over the preceding year.

3) Digital revenues were 57.0% of total revenues in FY22, a growth of 41.2% in constant currency terms.

4)  For FY22, the board recommended a final dividend of Rs 16 per share. Together with the interim dividend of Rs 15 per share already paid, the total dividend per share for FY22 will amount be Rs 31, up 14.8% over FY21.

5) Infosys Finacle enabled WhatsApp Banking for Union Bank of India.

6) The company added 110 clients, taking the total to 1,741. Of these, top 5 clients contribute 11.8% to the revenue.

7)  Total employee strength was at 31.4 lakh at the end of March, up from 2.60 lakh a year ago. Revenue per employee was at $57,700 in the March quarter.

Management commentary

Salil Parekh, CEO and MD, said Infosys continued to gain market share as a result of sustained clients’ confidence in its ability to successfully navigate their digital journeys.

“With the acceleration of digital disruptions across industries, we see immense potential to engage and partner with clients as they transform, adapt and thrive. We will scale talent globally, invest in employees and accelerate innovation and digital capabilities to capitalize on the expanding market opportunities,” he said.

Nilanjan Roy, Chief Financial Officer, said with a robust demand environment ahead, the company envisages making appropriate long-term investments in capability building across sales, delivery and innovation.

“However, we plan to neutralize some of the impact through aggressive cost optimization programs and value-led pricing driven by service and brand differentiation. This, along with post-pandemic normalization of expenses, is reflected in the margin guidance,” he said.