Infosys Q4 review – Disappointing results; outlook skeptical

In Q4 FY23, Infosys Ltd. reported revenue of Rs 37,441 crore, up 2.3% QoQ and 3.2% QoQ (in constant currency terms) which stood way below our expectations.

Infosys’ operating profit stood below our expectations again at Rs 7,877 crore, reporting a de-growth of 4.4% QoQ. The company’s operating margins, remained flat at 21.0%, largely led by lower operating expenses and a favorable currency mix during the quarter. Furthermore, its net profit for Q4 FY23 stood at Rs 6,128 crore, registering a de-growth of 7% QoQ.

From a near-term perspective, we believe global uncertainties and economic slowdown may impact the automation spend and result in delays in investment decisions in North America from where the company earns its majority of the revenue ( ~40%). IT services are expected to have lower demand in the near term.

As compared to North America, Europe is expected to have resilient demand and positive investment to continue. As these uncertainties will settle down in the next two to three quarters, the demand scenario will gain momentum once again and would be backed by consistent deal wins. Bloomberg