■ Infosys delivered a broadly in-line operating performance in Q4. Revenue growth was a tad softer, while EBITM came in slightly better than expectations. Revenues grew 2.8% QoQ to USD3.6bn (2% CC). Digital revenues rose 5.6%/38.6% QoQ/YoY to USD1.86bn.
■ Infosys guided for 12-14% YoY CC revenue growth for FY22, implying a 2.6-3.3% CQGR over Q1-Q4. The company guided for 22-24% EBITM, broadly in line with our estimates, factoring in the impact of wage hike (Jan'21 and Jul'21) and large deals' transition costs.
■ Large deal intake moderated sequentially but remained healthy at USD2.1bn in Q4 (52% new). Large deal TCV signed in FY21 was at an all-time high of ~USD14.1bn (+56.6% YoY) with net new deal wins of USD9.3bn (~2.7x YoY). The deal pipeline remains healthy.
■ We lowered FY22/23E EPS by <1%, factoring in FY21 performance, buyback and higher ETR. Q4 lacked positive surprises after strong growth in the last two quarters. Strong revenue momentum with stable margins, continued market share gain, strong deal intake, robust cash conversion and comparable cash payouts will narrow down the valuation gap with TCS. We maintain Buy/OW in EAP, with a TP of Rs1,550 at 25x FY23E earnings.