Hits And Misses Of Infosys Q3 Results: From LTM Attrition, Profits, To Order Book

Just as expected, Infosys reported a seasonally weak quarter in the period ending December 31, 2023. Infosys has revised its FY24 revenue growth to 1.5%-2.0% in constant currency and maintained its operating margin guidance at 20%-22%. Large deal wins were healthy at $3.2 billion. IT sector's Q3 is likely to be hit due to prevailing challenges in macro conditions.

Dhruv Mudaraddi, Research Analyst, StoxBox has highlighted hits and misses of Infosys Q3 results:

- Reported revenue declined 0.4% QoQ / up 1.3% YoY in rupee terms to Rs. 38,821 crores, beating market estimates of Rs. 38,694 crores owing to a challenging quarter primarily influenced by sustained weak demand, absence of certain one-time sales and the impact of furloughs.

- EBIT slumped 7.1% QoQ and 8.2% YoY to Rs. 8,274 crores, however beating market expectations of Rs. 7,934. The EBIT margin also contracted to 21.3% (down 153 bps QoQ / down 220 bps YoY) attributed to the impact of two months of wage hikes in the quarter and the absence of one-time sales in 2Q.

- Net income stood at Rs. 6,113 crores (down 1.6% QoQ / down 7.2% YoY), marginally below market estimates of Rs. 6,160 crores. The PAT margin inched down to 15.7% (down 19 bps QoQ / down 144 bps YoY).

- LTM attrition followed broader trends and declined 170bps to 12.9% in Q3FY24.

- Order book recorded for Q3FY24 stood at $3.2 billion with 71% of this as net new deals.

- The company is in the process of acquiring InSemi, a leading semiconductor design service provider, for Rs. 280 crores.

- Infosys reported a headcount of 322,663 employees as of December 31, 2023, with a net reduction of 6,101 employees in Q3FY24. Utilization ex-trainee improved by 90 bps QoQ to 82.7%.

In 9MFY24, Infosys revenue was at Rs 115,748 crore, up by 5.9% YoY. While its operating margin stood at 20.8%, declining sequentially by 0.2% YoY. In constant currency, the revenue growth was 1.8% YoY. Also, net profit was at Rs 18,264 crore, up by 1.7% YoY.

Infosys did not declare any dividends, unlike its major rival TCS who also declared its Q3 results on January 11. Infosys' share price will react to Q3 numbers on Friday.

On BSE, Infosy's share price ended at Rs 1,495 apiece, down by 1.6% with a market cap of Rs 6,20,491.91 crore on Thursday. Infosys is the second largest IT firm after TCS.

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