Infosys’s Q4 results has disappointed as it missed estimates due to muted growth q-o-q cc. However, its 13-15% revenue growth guidance for FY23 and all-time high net additions reflect strong demand outlook. Management lowered FY23 margin guidance by 100bps to 21-23% due to ongoing cost pressures.
Lower than expected revenues resulted in a sharp 190bps q-o-q decline in EBIT margins to 21.6%, and resulted in 2% q-o-q decline in profits to Rs 57 bn. For FY22, Infosys delivered 19.7% y-o-y cc growth with 150bps margin compression to 23%.
Muted growth was in its top-2 verticals – BFSI and Retail, and top markets North America and Europe and sharp decline in Life Sciences vertical resulted in the subdued growth performance. Growth in Manufacturing, Communications and Energy & Utilities was strong.
Infosys’ 22K net hires in Q4 were the highest ever. Its FY23 guidance implies 2.7-3.4% CQGR which seems reasonable. Infosys’ margins were down 190bps q-o-q due to higher than expected pass-through costs, higher employee costs, rise in travel costs.
