Infosys revenue declined by 2.3% QoQ; the firm posted EBIT growth of 13.2% on-year while sequentially it fell by 4.4%.
Infosys’ fiscal fourth-quarter results were disappointing, with the quarterly net profit and revenue coming in short of market expectations. The company’s revenue in CC terms fell by 3.2% quarter-on-quarter, which was not in line with expectations of stable growth. The margins were also under pressure, sitting at 21%. Additionally, on-year revenue growth too at 15.4% was a miss as management expectations were at 16-16.5%. The impact on the IT major’s revenue came from cancellation of certain projects, delay in the ramping of deals as well as the challenging environment in America.
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“Infosys reported a subdued 4QFY23 performance. Margins were below our expectations. Management has guided FY24 revenue growth of 4%-7% in constant currency, and EBIT margin of 20-22%. Both the guidance are below our as well as street expectation and indicate challenging FY24,” said Mitul Shah, Reliance Securities. Revenue declined by 2% QoQ in USD to $4,554 million, which was 3.5% below Reliance Securities’ estimate of $4,718 million. Sequential constant currency revenue fell 3.2% compared to the brokerage’s estimate of 0.4% growth.
Macroeconomic conditions weigh
“For FY23 management revenue guidance did not meet its expectation while margins came in-line. Further for FY24, they seem cautious on macro conditions in the US, also clients seem spending wisely on projects as focus is more on cost optimization and vendor consolidation. So, for FY24, management guided revenue growth of 4-7% in CC and operating margin to be in the range of 20-22%,” said a report by Religare Broking.
“The FY23 revenue guidance miss along with sub-par FY24 guidance clearly shows that the global weak macroeconomic environment is weighing on the company’s performance, with discretionary projects taking a backseat and decision-making cycle becoming longer. It would be interesting to see how the company steers through this difficult phase, especially against the backdrop of the demand weakening becoming more broad-based across business verticals,” said Manish Chowdhury, Head of Research, Stoxbox.
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Deal momentum continued to be strong
“Infosys continued to win large deals, so in Q4FY23 and FY23 it won deals worth $2.1 billion (de-growth of 7% YoY) and $9.8 billion (growth of 3% YoY). In addition, clients’ prospects are changing and they are focusing more on efficiency, cost and consolidation opportunities which have resulted in Infosys winning more large term deals,” added the report by Religare Broking.
