Breaking Down Infosys' Q4 results: Key Takeaways and Insights investors must know

Access the most recent insights regarding Infosys' Q4 results, featuring essential takeaways, growth highlights, and analysis. This article explores the significance of these results for the company and its stakeholders.

Infosys Q3 Results

India's top IT firm, Infosys, recently released its Q4 results, and investors, business leaders, and industry insiders are eager to examine its performance and strategy. This article delves into the company's performance, examining key metrics, trends, and takeaways to help readers understand Infosys' outlook.

Key highlights of Q4 FY2023 results

Infosys reported its Q4 results for the period ending March 31, 2023. The company's consolidated net profit grew by 8% YoY to reach Rs 6,128 crore, while the consolidated revenue increased by 16% YoY to reach Rs 37,441 crore. However, Infosys should have included the estimates for its bottom and top lines. The company also missed its revenue growth guidance for FY23 but met its operating margin target. In addition, Infosys declared a final dividend of ₹17.5 per share for FY23. Infosys' rival TCS also missed the street's estimates for Q4. Key highlights of the Q4 results are presented in the form of bullet points below:

  • Revenue in rupee terms decreased by 2.2% quarter-on-quarter but increased 16% year-on-year.
  • The revenues demonstrated a YoY growth of 8.8% in constant currency (CC) terms but recorded a QoQ decline of 3.2%.
  • Operating margin witnessed a YoY decline of 0.6% and a QoQ decline of 0.5%, standing at 21.0%
  • PAT was approximately ₹6,128 crores, indicating a decline of nearly 16% QoQ but an increase of nearly 6% YoY.
  • Basic EPS showed a YoY growth of 9.0%, amounting to ₹14.79.
  • In the fiscal year 2023, Infosys distributed 86% of its Free Cash Flow (FCF) to its shareholders.

Performance segment-wise

In the March quarter, Infosys experienced a decline of 1.7% in revenue from the financial services sector, constituting almost 26% of the software giant's total revenue. Similarly, the communication vertical also witnessed a decline in revenue by more than 2%. On the other hand, the manufacturing vertical recorded the highest growth of 22%, while energy and life sciences contributed equally, with a growth rate of 14% each. The retail sector also performed well, with a YoY growth of 10%.

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Performance geography-wise

Although the US and Europe faced economic challenges due to the recent banking collapse, Infosys generated most of its revenues from these regions. North America accounted for 61% of the total revenue, and Europe's share stood at 27%. Infosys' revenue from India was merely 3%, while the Rest of the World contributed approximately 9%. Year-on-year, North America witnessed a growth of 5.7%, and Europe's growth rate was 14%. However, India experienced a decline of over 13% during the quarter, despite its minor contribution to the company's revenue.

Dividends by the company

Infosys has declared a final dividend of ₹17.50 per share for the fiscal year 2023, an increase from the earlier dividend of ₹16.50 per share. In total, Infosys paid ₹34 per equity share in FY23, representing a growth rate of 9.7% from the previous fiscal year FY22. The record date for the Annual General Meeting and the final dividend payment is set on June 2, 2023, as announced by Infosys. The company stated that the dividend would be disbursed on July 3, 2023.

Guidance for FY2024

On Thursday, Infosys, an IT company, projected revenue growth of 4% to 7% for the current fiscal year in constant currency terms, with an operating margin guidance of 20% to 22%.

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In summary, while Infosys missed estimates for Q4 FY2023, the company has shown a YoY increase in consolidated net profit and consolidated revenue. The manufacturing, energy, and life sciences sectors have performed well, while the financial services and communication sectors declined. The company has also increased its dividend payout for FY23 and has guidance for FY2024 in place. Investors should consider these factors while evaluating their investment in Infosys.

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.

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