Strong Topline but bottom line affected due to high attrition and subcontracting costs | Infosys Q4FY22 Conference Call Highlights

2 min read
  • Q4FY22: Revenues in CC terms grew by 20.6% YoY and 1.2% QoQ. Reported revenues at `32,276 crores, a growth of 22.7% YoY. Operating margin at 21.5%, decline of 3.0% YoY. Basic EPS at `13.56, growth of 13.4% YoY. Free cash flow (FCF) at `5,769 crore, decline of 0.9% YoY; FCF conversion at 101.3% of net profit.
  • FY22: Revenues in CC terms grew by 19.7% YoY. Reported revenues at `1,21,641 crore, growth of 21.1% YoY. Digital revenues at 57.0% of total revenues, YoY CC growth of 41.2%. Operating margin at 23.0%, decline of 1.5% YoY. Basic EPS at `52.52, growth of 15.2% YoY. FCF at `22,803 crore, growth of 3.6% YoY; FCF conversion at 103.0% of net profit.
  • Margins are affected due to high attrition, one contractual provision, and high subcontracting cost.
  • Less than 100 employees in Russia, even though they are moving out of the country and have no active clients in the region.
  • Digital revenues at 59.2% of total revenues, YoY CC growth of 38.8%
  • Clients: $10 M+ client up by 1 and $100 M up by 1 this quarter as compared to Q3FY22. The top 5 clients contribute 11.8% to the total revenues.
  • TCV (Total Contract Value): Large deal at $ 2.3 B in Q4FY22 and $9.5 bn in FY22.
  • Human Resource: Added 21,948+ employees this quarter, LTM attrition at 27.7% in Q4FY22 as compared to 25.5% in Q3FY22. Looking to add 50,000 employees in FY23.
  • Capital Allocation: For FY22, the Board has recommended a final dividend of ₹16 per share. Together with the interim dividend of ₹15 per share already paid, the total dividend per share for FY22 will amount to ₹31 which is a 14.8% increase over FY21. With this, the company has announced a total dividend of approx. ₹13,000 crores for FY22.
  • Headwinds going forward: Travel costs coming back, supply-side challenges
  • Tailwinds going forward: Increase Automation, cost optimization, and subcontracting costs have plateaued this quarter, strong demand seen across the digital, cloud.
  • FY23 Guidance: Revenue Growth (13-15%) in Constant Currency, Operating Margins (21-23%).

Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell stocks or MF.

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