Infosys - Q4FY22 First Cut - ICICI Direct

(CMP - Rs. 1748, Mcap - Rs. 7,35,611 crore)

Guidance for FY23: The company has given revenue guidance of 13-15% in CC terms for FY23E. EBIT margin guidance for FY23E stands at 21-23%.

Guidance vs Actuals for FY22: The company ended FY22 within the guided range i.e revenue grew by 19.7% in CC terms vs guided range of 19.5-20% while EBIT Margin for FY22 was 23% vs guided range of 22-24%

Infosys revenue/margin numbers were below our estimates for Q4. The company's revenues increased by 1.2% QoQ nd 20.6% on YoY in CC terms (vs our estimates of 3% QoQ growth in CC terms) while dollar revenues increased by 0.7% QoQ vs our estimate of 2.7% QoQ . It reported EBIT margin of 21.5% (vs our estimate of 23.2%). Revenue growth was across geographies & verticals. In terms of geographies, revenue growth was led by Europe which grew by 28.3% YoY, followed by North America which grew by 18.5% YoY in CC terms. In terms of verticals the growth was led by BFSI, Retail, Communication, which grew 14.1%, 16.5% and 29.2% YoY in CC terms. The company recommend final dividend of Rs. 16 per share for FY22.

The company's digital revenues increased by 38.8%YoY and now accounts for 59.2% of overall revenues. In terms of large deal pipeline, it was up by 9.5% YoY to US$2.3 billion, but was down 9.1% QoQ

Q4FY22 Earnings Summary

Constant currency (cc) revenues increased by 1.2% QoQ while US$ revenues increased 0.7% QoQ to $4,280 million (below our estimate of 2.7% QoQ increase to US$4,365 mn)

Rupee revenues grew 1.3% QoQ to Rs. 32,276 crore (vs. our estimate of 32,836 crore and 3.0% QoQ growth)

Reported EBIT margins declined by ~200 bps QoQ to 21.5% (vs our estimate of 23.2%). EBIT walk would be available in the call but lower revenues and continued high employee costs (up 4.2% QoQ) impacted margins

Reported PAT stood at Rs. 5,606 crore vs our expectations of Rs. 5,917 because of weak operating performance

The company ended FY22 within the guided range, The revenue growth guidance for FY23E reflects another strong year for the year which means demand environment continue to strong on the back of healthy deal wins. However EBIT margin guidance for FY23E, which is lower 100 bps on both higher and lower end of the guided FY22 band , reflects the continued cost pressures due to demand supply mismatch. We will come out with an update post the earnings call.

Shares of Infosys Limited was last trading in BSE at Rs. 1748.65 as compared to the previous close of Rs. 1741.45. The total number of shares traded during the day was 201207 in over 10285 trades.

The stock hit an intraday high of Rs. 1759.45 and intraday low of 1732.25. The net turnover during the day was Rs. 351412970.00.

Source : Equity Bulls

Keywords

Infosys INE009A01021 INFY Q4FY22 FY2022 Results FirstCut