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Infosys Q3 takeaways: Revenue guidance, attrition, margin, deal wins & more

Infosys Q3 takeaways: Revenue guidance, attrition, margin, deal wins & more

Infosys reported a 13.4 per cent year-on-year (YoY) rise in net profit at Rs 6,586 crore for the December quarter compared with Rs 5,809 crore in the same quarter last year.

Infosys said its deal wins for the quarter were strongest in eight quarters. The company won orders worth $3.3 billion during the quarter Infosys said its deal wins for the quarter were strongest in eight quarters. The company won orders worth $3.3 billion during the quarter

Infosys on Thursday reported a 13.4 per cent year-on-year jump in profit, which was in line with 11-15 per cent profit growth analysts anticipated for the quarter. The Bengaluru-based firm said its deal wins was highest in the last eight quarters. Attrition fell, Infosys said, but the IT major maintained its FY23 Ebit margin guidance. Infosys, though, increased its revenue guidance. Most analysts were expecting the IT major to stay put. 

Bottom line growth

Infosys on Thursday reported a 13.4 per cent year-on-year (YoY) rise in net profit at Rs 6,586 crore for the December quarter compared with Rs 5,809 crore in the same quarter last year. Sharekhan expected Infosys profit at Rs 6,563 crore; PhillipCapital saw it at Rs 6,657 crore; Nirmal Bang at Rs 6,546.70 crore and Motilal Oswal at Rs 6,500 crore. On an average, Infosys profit was in line with analyst estimates.

Revenue guidance 

Infosys has revised upward its CC revenue guidance to 16 per cent-16.5 per cent from 15 per cent-16 per cent earlier. Most analysts on the Street did not expect the IT major to increase its revenue guidance. Infosys, on the other hand, retained its Ebit margin guidance at 21-22 per cent for the financial year, in line with Street expectations.

Ebit margin
Operating profit margin for the quarter came in at 21.5 per cent compared with 23.5 per cent in the year-ago quarter. PhillipCapital estimated Infosys margin at 21.6 per cent. Nirmal Bang saw Infosys margin at 22.3 per cent.  

Order wins

Infosys said its deal wins for the quarter were strongest in eight quarters. The company won orders worth $3.3 billion during the quarter. This was against $2 billion orders Nirmal Bang anticiated ahead of the quarterly results. Nirmal Bang was expecting a sequential decline in orders after a record September quarter (which was highest in seven quarters). But Infosys continued the strong trend. 

It added a total of 134 clients for the quarter against 103 clients in the September quarter. Top 5 clients accounted for 13.1 per cent to revenues compared with 12.6 per cent in September and 12 per cent in the year-ago quarter.

Attrition rate 

Infosys said last twelve-month voluntary attrition for IT services stood at 24.3 per cent, down from 27.1 per cent in September and 25.5 per cent in the year-ago quarter. total headcount for the quarter stood at 3,46,845 against 3,45,218 in September quarter and 2,92,067 in the year-ago quarter. 

Attrition reduced meaningfully during the quarter and is expected to decline further in the near-term, said Nilanjan Roy, Chief Financial Officer, who said operating margins in Q3 remained resilient due to cost optimisation benefits which offset the impact of seasonal weakness in operating parameters.

Management commentary

CEO and MD Parekh said the revenue growth was strong for the quarter, with both digital business and core services growing. "This is a clear reflection of our deep client relevance, industry-leading digital, cloud, and automation capabilities, and the unrelenting dedication of our employees”, Parekh said.

“As reflected in the large deals momentum, we continue to gain market share as a trusted transformation and operational partner for our clients. Our end-to-end capabilities and global scale make us a preferred choice as clients look at consolidating vendors. We remain focused on helping businesses accelerate their digital agenda to uncover new value and growth, as well as improve operational and cost effectiveness”, Parekh added.

Also Read: Infosys Q3 results: Profit rises 13.4% to Rs 6,586 crore; FY23 revenue guidance revised upward

Published on: Jan 12, 2023, 5:12 PM IST
Posted by: Priya Raghuvanshi, Jan 12, 2023, 5:06 PM IST