Infosys - 4QFY22 Result - First Cut - Reliance Securities

Mr. Mitul Shah, Head of Research at Reliance Securities.

- Infosys reported a subdued performance in 4QFY22 with EBIT margin coming in at 21.6%, 164bps below our estimate of 23.2%.

- Revenue grew by 1% QoQ/19% YoY in USD to US$4,280mn, 2.6% below our estimate of US$4,395 (consensus US$4,385). Sequential constant currency growth came in at 1.2% vs. our estimate of 3.7%. (consensus 3.5%)

- EBIT de-grew by 7% QoQ (up 8% YoY) to Rs69.6bn while EBIT margin stood at 21.6% (down 193bps QoQ /down 292bps YoY), 164bps below our and consensus estimate of 23.2%.

- Its net income stood at Rs56.9bn (down 2% QoQ/ up 12% YoY), while adjusted net margin came in at 17.6% vs. our estimate of 18.1%.

- Large deal signings stood at US$2.3bn compared to US$2.5bn in 3QFY22.

Our View: Infosys reported a subdued 4QFY22 performance. Revenue, as well as margins, were below our expectations. Considering the industry-leading double-digit revenue growth, rising share of digital business (58.5% of revenue), elevated EBIT margin levels vs. pre-Covid levels, and a consistent capital allocation policy, we have a BUY recommendation at present with a 1-Yr target price of Rs2,250, valuing the stock at 30x FY24E earnings.

Shares of Infosys Limited was last trading in BSE at Rs. 1748.65 as compared to the previous close of Rs. 1741.45. The total number of shares traded during the day was 201207 in over 10285 trades.

The stock hit an intraday high of Rs. 1759.45 and intraday low of 1732.25. The net turnover during the day was Rs. 351412970.00.

Source : Equity Bulls

Keywords

Infosys INE009A01021 INFY Q4FY22 FY2022 Results FirstCut RelianceSecurities