Infosys Ltd., India’s second-largest IT services company, reported mixed results across various metrics for the fourth-quarter (Q4) ended 31 March, 2024. Here are the key highlights –
Infosys’ Financial Performance
Net Profit
Infosys reported a robust year-on-year increase in net profit, increasing by 30% to reach ₹7969 crore compared to ₹6128 crore in the same period last year. This figure surpassed analysts’ estimates.
Revenue
Revenue, however, from operations experienced a slight increase of 1.3% YoY, reaching ₹37923 crore compared to ₹37441 crore in the corresponding quarter of the previous year. Despite this growth, the revenue figure missed market expectations.
Operating Margin
The operating margin stood at 20.1%, signifying a marginal decline both YoY and quarter-on-quarter and suggesting some pressure on profitability despite the rise in net profit.
Guidance for FY25
Citing uncertain demand conditions, Infosys slashed its revenue growth guidance for FY25 to 1-3% in constant currency terms. Previously, the company had forecast growth of 4-7%.
Dividend Declaration
Final Dividend
The board of Infosys recommended a final dividend of ₹20 per equity share for FY24.
Special Dividend
Infosys announced a special dividend of ₹8 per share, providing an extra boost to shareholder returns.
Market Reaction
The company’s American Depository Receipts (ADRs) witnessed a significant decline of 7% pre-market following the release of the Q4 results, highlighting investors’ concerns regarding Infosys’ performance.
Efficiency and Client Value
Infosys CEO Salil Parekh highlighted the company’s strong client trust reflected in record deal wins and its focus on Generative AI for areas like software engineering and customer support. The company also aims to return 85% of free cash flow to shareholders over the next five years through dividends and buybacks.
Operational Highlights
Hiring Model Changes
Infosys CFO Jayesh Sanghrajka revealed a significant shift in hiring models, with a focus on off-campus recruitment exceeding on-campus hiring. This could be a strategy to address the declining attrition rate and optimize talent acquisition costs.
Attrition Rate
The company reported a decline in attrition rates, dropping to 12.6% from 20.90% in Q4FY23.
Segment and Geography-wise Performance
Segment Revenue
Infosys witnessed a mixed performance across its business segments, with growth in hi-tech and manufacturing sectors counterbalanced by declines in financial services, retail and other segments.
Geographic Revenue
While revenue from North America and Europe markets displayed mixed trends, domestic revenue saw a significant decline of 16.1% YoY, suggesting challenges in the Indian market.
Strategic Initiative
Infosys announced the acquisition of German firm in-tech in an all-cash deal worth €450 million, aimed at enhancing its engineering R&D capabilities, particularly in the automotive sector.
Infosys announced a definitive agreement to acquire in-tech. This strategic investment strengthens Infosys’ Engineering R&D capabilities, creating deeper client relationships, and an extensive industry expertise for the next phase of automotive innovation with multidisciplinary… pic.twitter.com/CRqdkqnFtN
— Infosys (@Infosys) April 18, 2024
Infosys stock closed at ₹1420.55 per share on the Bombay Stock Exchange on Thursday, before the announcement of its Q4FY24 results.
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