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Infosys trims FY24 revenue guidance and declares dividend

Infosys trims FY24 revenue guidance and declares dividend

India’s second-largest software services exporter, Infosys Ltd., announced its second-quarter earnings last week. The market took the result with a pinch of disappointment and traded the stock down 4% following the result. ADR, listed on the NYSE, opened around 7 percent lower overnight at $16.40 per share.

The company's net profit rose 3.17 percent to Rs. 6,212 crore, compared to Rs. 6,012 crore in the corresponding period last year. Infosys also declared an interim dividend of Rs. 18 per equity share, with a record date of October 25. Infosys reported a 3.6% rise in revenue in dollar terms to $4,718 million in Q2 against $4,555 million in the September quarter. On a sequential basis, revenue grew 2.2% from $4617 million.

The reason for Infosys share price was disappointing earnings, disappointing market expectations, and the company trimming revenue guidance for FY24 from 1%–3.5% to 1%–2.5%, which proved negative for stock and the underlying took the hit. In constant currency terms, it now projects revenue growth in FY24 of 1% to 2.5%. It did, however, stick to the 20%–22% operating margin guidance for the year.

Revenues by client geography from the North American region have increased by 1 percent YoY in CC terms, in percentage terms, from 60.8% to 61.1%. Revenue from the India region has increased by 2.6 percent in CC terms, from 2.7% to 2.8%. Revenue from the rest of the world as well as Europe both fell. Revenue from financial services and the hi-tech ad communication segment fell on a Q-o-Q basis as well as a year-over-y basis, whereas revenue from retail, life sciences, and manufacturing segments rose on a quarterly as well as a yearly basis.

Among the business segments, revenue from financial services and communication declined 7.3 percent and 4.3 percent YoY, respectively, in CC terms. However, revenues from life sciences, manufacturing, and retail rose 18.4 percent, 12.6 percent, and 9.2 percent in CC terms, respectively.

The company added 100 new clients during the period on a gross basis. The number of active clients remained stable on a q-o-q basis but has risen by 5% on a year-over-y basis. The company reported an increase of 1 million+ clients by 11 and maintained stability in the number of clients, with a marginal increase in 50 million and 100 million clients. According to Salil Parekh, CEO and MD, the company had the highest large deal value at $7.7 billion in Q2 spread across all verticals and geographies.

Revenue for the quarter ending September increased by 2.8% to Rs. 38994 on a consolidated basis. Operating margin increased on a q-o-q basis from 20.8% to 21.2%.

QUARTERLY P&L Sep-23 Jun-23 Mar-23 Dec-22 Sep-22
Total Income 39,626.00 38,494.00 38,112.00 39,087.00 37,122.00
Total Income Growth (%) 2.94 1 -2.49 5.29 5.62
Total Expenses 30,720.00 30,042.00 29,564.00 30,076.00 28,665.00
Total Expenses Growth (%) 2.26 1.62 -1.7 4.92 4.02
EBIT 8,906.00 8,452.00 8,548.00 9,011.00 8,457.00
EBIT Growth (%) 5.37 -1.12 -5.14 6.55 11.42
Profit after Tax (PAT) 6,212.00 5,945.00 6,128.00 6,586.00 6,021.00
PAT Growth (%) 4.49 -2.99 -6.95 9.38 12.33
EBIT Margin (%) 22.48 21.96 22.43 23.05 22.78
Net Profit Margin (%) 15.68 15.44 16.08 16.85 16.22

 

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