In the constant evolution of the global IT industry, Infosys Limited has consistently stood out as a symbol of innovation and excellence. Infosys has established a notable presence in India where the IT-BPM sector contributes around 7.5% to its GDP. The Indian IT sector employs a workforce of around 5.4 million. During this dynamic setting, Infosys has unveiled its earnings report for the fourth quarter of the fiscal year 2024.
This article aims to provide a thorough examination of Infosys’ financial results and performance indicators from the Infosys q4 earnings results release, highlighting how the company’s growth and commitment to shareholder value are evident.
About company
Infosys Limited, an Indian multinational corporation, is a renowned player in the realm of next-generation digital services and consulting. Founded in 1981, Infosys has experienced remarkable growth, expanding from a modest capital of $250 to become a global powerhouse with a market value of $18.55 billion and a workforce of over 322,000 employees.
Infosys offers a range of services including business consulting, information technology, and outsourcing. It helps clients from over 50 countries navigate their digital transformation. With extensive experience in managing the systems and workings of global enterprises, Infosys skillfully guides its clients through their digital journey.
The company is dedicated to maximising human potential and generating new opportunities for individuals, businesses, and communities. Infosys is dedicated to creating a sustainable future and has a robust Environmental, Social, and Governance (ESG) vision.
Infosys has consistently shown its ability to adapt and innovate in the rapidly evolving IT sector. The growth and success of the company demonstrate its dedication to excellence and its capacity to provide value to its clients.
Quarterly performance
In the third quarter of FY2024, Infosys’s performance showed a slight dip across various financial metrics including sales, operating profit, profit before tax, net profit, and EPS.
To better understand the fiscal year 2024, let’s compare the amounts from each quarter.
| Jun 2023 – Q1 | Sept 2023 – Q2 | Dec 2023 – Q3 | Mar 2024 – Q4 | |
| Sales | 37,933 | 38,994 | 38,821 | 37,923 |
| Change | 2.80% | -0.44% | -2.3% | |
| Operating profit | 9,064 | 9,440 | 9,137 | 7,621 |
| Change | 4.15% | -3.21% | -4.3% | |
| Net profit | 5,945 | 6,215 | 6,113 | 7,975 |
| Change | 4.54% | -1.64% | 30.4% | |
| EPS | 14.32 | 14.97 | 14.71 | 19.22 |
Source: Screener
While Infosys experienced revenue growth YoY of 1.3%, the QoQ figures were more modest. Despite facing obstacles in sales and operating profit, the company successfully achieved a substantial increase in its net profit.
Also read: What do you mean by EPS
Expectations vs reality
As we approached the end of the fiscal year 2024, expectations were building up for Infosys’s Q4 results. According to various sources, Infosys was expected to post a modest performance in Q4.
Analysts had varying expectations for Infosys’ Q4 results, predicting a moderate increase in revenue while anticipating stable margins. As per analysts, the IT sector was expected to experience limited revenue growth for the quarter, and Infosys was no different.
Emkay Global Financial Services predicted that Infosys would provide revenue growth guidance of 3-6% for FY25, along with an estimated EBIT margin guidance of 20-22% for the same period.
HDFC Securities had projected a decline of 0.90% YoY and 0.60% QoQ in Infosys’ adjusted PAT for the quarter that ended in March 2024. However, it had forecasted a 3.5% year-over-year and 1% quarter-over-quarter increase in net sales.
According to Nuvama Institutional Equities, it was expected that Infosys would experience a decrease in its EBIT margin of almost 30 bps QoQ due to factors such as the impact of a one-month wage hike, some furloughs, and a decline in revenue.
Now, let’s compare the expectations from the results to the actual results revealed by the company:
| Q4 2024 | Actual figures (Q4 2024) | Analysts’ predictions | Expectations (Above/Below) |
| Net profit (₹ crores) | 7,975 | 6,142 | Above |
| Revenue (₹ crores) | 38,555 | 38,590 | In line |
| EBIT (₹ crores) | 7,621 | 7,906 | Below |
Source: Livemint
This provides a snapshot of the company’s performance against market expectations.
Infosys share price reaction
The Infosys share price NSE closed at ₹1,429.50 with a 1.06% increase before the earnings announcement on April 18, 2024.
Source: Google Finance
If we talk about Infosys’ share price history, the stock has given a 93.70% return for the last 5 years as of April 18, 2024.
Source: Google Finance
Competitor information
| Current price (as of April 18, 2024) | PE (TTM) | Market cap(₹ crores) | Net profit Q3 FY24(₹ crores) | Operating revenue Q3 FY24(₹ crores) | |
| Infosys Ltd. | ₹1,429.50 | 25.17 | 613,954.81 | 6,106 | 38,821 |
| Tata Consultancy Services Ltd. | ₹3,871.00 | 32.09 | 1,439,727.47 | 11,058 | 60,583 |
| Wipro Ltd | ₹445.20 | 22.46 | 253,440.37 | 2,694.2 | 22,205.1 |
| HCL Technologies Ltd. | ₹1,468.00 | 26.71 | 419,329.1 | 4,350 | 28,446 |
| LTIMindtree Ltd. | ₹4,710.50 | 31.75 | 145,934.52 | 1,168.9 | 9,016.6 |
| Tech Mahindra Ltd. | ₹1,187.00 | 43.84 | 123,403.67 | 510.46 | 13,101.34 |
Source: Trendlyn
Also read: What is PE ratio
Investing pros and cons
Strengths of Infosys:
- Diversified offerings & digital growth: Infosys has a diverse range of offerings across service segments and industry verticals, with a substantial and expanding share of revenue from digital services, which accounted for 62% in fiscal 2023.
- Strong market position & scale: This company is the second-largest listed Indian IT services company by revenue and boasts a large scale of operations, backed by a highly skilled workforce of 322,000 employees.
- Healthy financial profile: Infosys boasts a robust financial risk profile, thanks to its impressive annual cash generation and a debt-free balance sheet that has remained untarnished for more than 10 years. Net cash accrual for fiscal 2023 was ₹14,679 crore, following a dividend payout of ₹13,654 crore.
- Strategic investments & acquisitions: The company is projected to maintain its focus on niche acquisitions to enhance its domain expertise. These investments will be primarily financed by its cash surplus and strong accruals.
Also read: Merger vs Acquisition
Weaknesses of Infosys
- Intense global competition: Infosys operates in a fiercely competitive global IT industry, going head-to-head with Indian majors like TCS, HCL Technologies, and Wipro, as well as global giants such as Atos SE, Capgemini SE, and Accenture Plc. This fierce competition may have an impact on the company’s market share and profitability.
- Macroeconomic headwinds: The company is currently dealing with macroeconomic challenges in important markets such as the US and Europe. This could potentially result in a slowdown in revenue growth, particularly in the financial services and retail sectors.
- Discretionary spending: The moderation in discretionary spending by large clients has had an impact on the IT industry, especially in traditional outsourcing services, and carries a certain level of risk. This may impact the company’s trajectory for revenue growth.
- Dependence on digital services: If there is a decline in IT spending or if there are difficulties in the digital sector, Infosys may face negative consequences on its financial performance, despite its substantial revenue from digital services.
Bottomline
Despite facing a challenging quarter with slight dips in financial metrics, Infosys demonstrates resilience and strategic planning capabilities, indicating a stable outlook for the company. Analysts predict moderate revenue growth and stable margins for Infosys in Q4 2024, with guidance for FY25 suggesting continued expansion and profitability.
Infosys maintains a strong market position with diversified offerings and a robust financial profile, although it faces intense competition and macroeconomic headwinds that could impact growth trajectories.
