RabindraBy Dhruv Mudaraddi, Research Analyst, StoxBox
Reported revenue declined 2.3% QoQ / up 1.3% YoY in rupee terms due to missing market estimates owing to a challenging quarter primarily influenced by sustained weak demand, delays in the ramp-up of large deals, pricing challenges, and seasonal softness.
# EBIT slumped 4.3% QoQ and 3.2% YoY to , missing market expectations The EBIT margin also contracted to 20.1% (down 41 bps QoQ / down 94 bps YoY) as better utilization rates and the absence of one-time costs were offset by weak growth and wage hikes in November 2023.
# Adj. Net income stood at Rs. 6,469 crores (up 5.8% QoQ / up 5.5% YoY), beating market estimates of Rs. 6,106 crores. The PAT margin inched down to 17% (up 131 bps QoQ / up 68 bps YoY).
# LTM attrition followed broader trends and declined 300bps to 12.6% in Q4FY24.
# Order book recorded for Q4FY24 stood at $4.5 billion and notably the large deal TCV was the highest ever for FY24 and stood at USD 17.7 billion.
# The company reduced its revenue growth guidance to 1-3% in CC terms in FY25 and EBIT margin guidance was maintained at 20-22%.
# The board of the company declared a final dividend of ₹20 per equity share for FY24. Along with this, the company announced a special dividend of ₹8 per share.
# The company has signed an agreement to acquire in-tech, a leading Engineering R&D services provider focused on the German automotive industry for EUR 450 million.
# Infosys reported a headcount of 317,240 employees as on March 31, 2024, with a net reduction of 5,423 employees in Q4FY24. Utilization ex-trainee improved by 80 bps QoQ to 83.5%.
View:
Infosys Ltd’s outlook appears cautiously optimistic despite recent challenges. The company’s weak topline and operating performance, attributed to factors like a one-time contract change with a large client, delays in deal ramp-ups, and pricing challenges, have been acknowledged. However, going forward, efforts to improve margins through large deal ramp-ups and Gen AI deployment indicate a strategic focus on growth and efficiency. While cautious spending in BFSI due to economic conditions poses a challenge, robust cloud adoption and growth in manufacturing sectors offer promising avenues. The significant proportion of new deals in the large deal TCV and a healthy deal pipeline signify potential for future growth. However, challenges in deal closures due to slower decision-making processes and furloughs warrant attention. Monitoring commentary on cost reduction initiatives, performance in the banking vertical, and outlook on client discretionary spending in CY24 will be crucial for assessing Infosys’ performance and trajectory in the coming quarters.
