Infosys Ltd. : Q4 FY23 Result Update
17-04-2023

Results	INR Cr.	Y-o-Y Growth	Comments
Revenue	37,441	16%	QoQ Revenue fell by 2.3% due to unplanned project ramp-downs and delays in decision making which resulted in lower volumes.
EBIT	7,877	13%	EBIT margin declined 50bps QoQ to 21 % due to decline in utilisation and lower revenue growth partially offset by cost optimisation
PAT	6,134	8%	Net Margin came in at 16.4% from 17.6% Y-o-Y

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Key highlights:

Total Contract Value (TCV) was muted at US$2.1bn, -36% QoQ, -7% YoY with full-year TCV at US$9.8bn. Demand uncertainty remains with more weakness in US than in Europe.

FY23 constant currency (CC) growth came in at 15.4% vs guidance of 16-16.5%.

Utilization levels (including trainees) fell to 77% from 80% in Q4FY22.

Management Outlook:

The company has provided margin guidance of 20-22%, against earlier expectations of 21-23% for FY24.

The company expects tailwinds in employee cost as it has already given 3 compensation hikes in the span of the last 15 months, and sees continuity in fall in attrition.

Company has provided revenue guidance of 4-7% YoY CC for FY24.

MoneyWorks4me Opinion:

As mentioned in our earlier Note, We anticipate delays in getting new order wins and pricing pressure in the short term due to the current slowdown and layoffs in major companies, as well as the banking crisis in the US and Europe.

We understand that the valuations in the IT space have been slightly on the higher side, which made us uncomfortable earlier. However, the recent correction in the market has brought down the PE ratio of Infosys to 21.7

The problems the industry is facing currently are short-term in nature but it might take 2-3 quarters before the company gets to normalized rate of growth. Nevertheless, the long-term prospects of the industry remain promising. Given its strong fundamentals and growth potential in the long run, we believe now is a good opportunity to start accumulating the stock.