Infosys Jun’21 Quarter Results – FY22 Revenue Guidance Revised Upwards; Deal Intake Remain Strong

Revenue growth was broadly in line with our estimates while EBITM was 110bps below our estimates on account of higher employee and subcontracting costs.

Likely stock reaction

Neutral to negative

Key positives - FY22 revenue growth guidance revised upwards to 14-16% in CC and broad based growth.

Result Summary

·         Infosys reported revenues of USD3.78bn, up 4.7%/21.2% QoQ/YoY (CC 4.8%/16.9% QoQ/YoY), broadly in line with our expectations of $ 3.76bn. (TCS Q1FY22 revenues was US$ 6..15bn, 2.4% CC QoQ)

·         EBITM declined ~80 bps QoQ to 23.7% due to higher subcontracting and employee costs and came 110 bps below our expectations. (TCS Adj. EBITM fell 130bps QoQ to 25.5%)

·         Adj. Profits at Rs51.95bn (2.3% QoQ, 22.7% YoY), below our expectations due to margin miss.

·         Infosys revised its FY22 guidance upwards to 14-16% in CC YoY (earlier 12-14%) while retained its EBITM guidance of  22-24% in-line with our expectations.

·         TCV of deal intake stood at USD2.6bn

Growth by Verticals (all in constant currency terms)

·         Financial Services: 22.6%YoY ( V/s 15.6% YoY in Mar’21 quarter)

·         Manufacturing: 18.5%YoY ( V/s 3.4% YoY in Mar’21 quarter)

·         Retail:  22.2%YoY  ( V/s 4.5% YoY in Mar’21 quarter)

·         ECS: 10.5% YoY( V/s 4.9% YoY in Mar’21 quarter)

·         Communication: 4.6% YoY( V/s -0.8% YoY in Mar’21 quarter)

·         Hi Tech: 14.8% YoY( V/s 15.5% YoY in Mar’21 quarter)

·         Lifesciences: 21.2% YoY( V/s 18.3% YoY in Mar’21 quarter)

Growth by Geographies (all in constant currency terms)

·         US: 21.1%YoY ( V/s 12.3% YoY in Mar’21 quarter)

·         Europe: 12.2%YoY ( V/s 5.1% YoY in Mar’21 quarter)

·         ROW: 4.9% YoY( V/s -0.9% YoY in Mar’21 quarter)

·         India: 20.7% YoY( V/s 30.8% YoY in Mar’21 quarter)

Manpower details

Total Headcount: 267,953, up  8,334 QoQ

LTM Attrition: 13.9%, V/s 10.9% in Mar’21 quarter