INFY Q4 FY2013 and FY2013 Results - First Cut - Microsec

Infosys Ltd (INFY) announced its consolidated Q4 FY2013 and FY2013 Results on 12 April 2013. Both the company's top line and bottom line came slightly below our estimates. While INFY's top line came slightly below Bloomberg Consensus Estimates, its bottom line came above street expectations on account of higher other income.

While INFY's top line increased 0.3% q-o-q to `10,454 Crores, its net profit grew 1.1% sequentially to `2,394 Crores in Q4 FY2013. The growth in top line was mainly led by 1.8% sequential increase in business volumes. However, a 70 basis points (bps) sequential decline in pricing and cross currency impact of 0.4% partially offset this growth. While we expected the company to report a volume expansion of 3%, our anticipation for the price decline was 50 bps. The underperformance on these two factors remained the key reasons for revenues coming slightly below our estimates. Furthermore, the company reported a 70 bps enhancement in the contribution from onsite operations, to the total revenue to 52.1%. The rise in onsite revenue, which generally have lower margins, share resulted in a 199 bps decline in INFY's Earnings Before Interest Depreciation Tax and Amortization (EBIDTA) Margins to 26.5% during the quarter. Although the company's EBIDTA Margins came lower than our expectation of 28.1%, a lower than expected tax outgo helped it report bottom line with in the expected lines. INFY also announced a final dividend of `27 for FY2013.

We were already not buoyant on the results of INFY. However, it reported numbers even slightly below our expectations. Furthermore, cum-Lodestone revenue guidance of 6-10% remains tepid. In addition, the company's management continues to believe that the environment remains volatile and challenging in Europe and the US. Its management also indicated that the pricing may stay under pressure in the upcoming quarters. Considering these factors, we continue to prefer TCS and HCL over INFY within the IT sector. Both of these players are consistently outperforming the company on all fundamental parameters and are expected to do so in the upcoming quarters as well.

Source : Equity Bulls

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