Infosys Q4 results analysis: Share buyback, dividends, guidance and more

Last updated: 14 Apr, 2021 | 12:37 pm

Infosys Q4 results analysis: Share buyback, dividends, guidance and more
  • Profit below estimates: Infosys, India's second-largest software services exporters, has reported a 2.6% on-quarter decline in consolidated net profit to ₹5,078 crore in Q4FY21, missing analyst estimates. Analysts had earlier estimated a profit of about ₹5,171 crore.
  • Revenue in-line: Infosys revenues grew 1.5% QoQ to ₹26,311 crore, backed by strong revenue growth in the digital services segment (up 34%). Large deal total contract value stood at $2.1 billion in the quarter. The table below shows Infosys revenue growth across various verticals for Infosys.
  • Operational margins decline: EBIT margin contracted to 24.5% down 90 bps from the previous quarter due to wage hikes and currency headwinds. 
  • Massive share buyback: Infosys has announced a massive Rs 9,200 crore share buyback programme. The buyback price of Rs 1,750 per share is at a 25.2% premium to Tuesday's closing price. This is the third buyback announced by the company in its history. Infosys has a capital allocation policy to return 85% of its free cash flow over a block of five years through a combination of dividends and buybacks.
  • Final dividend: For FY 21, the Board has recommended a final dividend of ₹15 per share. Together with the interim dividend of ₹12 per share already paid, the total dividend per share for FY 21 will amount to ₹27, which is a 54% increase over FY20.
  • Robust revenue guidance:Infosys expects revenue buoyancy to continue and has estimated growth of 12-14% in constant currency terms for FY22. The operating margin is forecast to be in the range of 22-24%, lower than the 24.5% upper end of FY21.

While Infosys has missed estimates on both topline and bottomline, it has maintained a robust revenue guidance for FY22. Through the year, Infosys was able to post robust results due to its record high deal wins, and implementing cost cuts to maintain its revenue and operational profitability. In FY21, Infosys has reported record high deal wins of $14.1 billion. FY21 has been a very good year with superior shareholder returns, backed by robust operating metrics and strong growth across verticals and free cash flows. Infosys share have gained by 116% in the last financial year.

The Covid-19 pandemic has forced a tectonic shift in businesses processes to move towards greater digitization. This has helped the IT sector to bounce back faster than other industries. Infosys said that the relevance of its offerings is resonating with its clients in these times. The company is also confident of further expanding its revenues and cash flows in the current year.

Finzoom Investment Advisors Private Limited (Brand Name - INDmoney, INDwealth, IND.app, IND.money, INDsave.com) makes no warranties or representations, express or implied, on products and services offered through the platform. It accepts no liability for any damages or losses, however, caused in connection with the use of, or on the reliance of its advisory or related services.

Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, goal, time frame, risk and reward balance and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs. Performance and returns of any investment portfolio can neither be predicted nor guaranteed.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Marketing and distribution of various financial products such as loans and deposits are powered by Finzoomers Services Private Limited.

INDmoney, INDwealth, IND.app are brand and product of Finzoom Investment Advisors (P) Limited.

© Finzoom Investment Advisors Private Limited

[SEBI RIA Registration No: INA100012190] [Type of Registration: Non-Individual] [Validity of registration: December 17, 2018-Perpetual] [Address: 616, 6th Floor, Suncity Success Tower, Golf Course Extension Road, Sector – 65, Gurugram, Haryana- 122005] [Principal Officer details: Mr. Gaurav Sharma, Email id: principalofficer@indwealth.in, Contact No. 8800826254] [Corresponding SEBI local office address: Securities and Exchange Board of India, Local Office, First Floor, SCO 127-128, Sector 17C, Chandigarh-160017]

[ARN - 151913] [Platform Partner : BSE (Member code-24801)] [CIN - U67190HR2018PTC073294] [GST No : 06AADCF3538Q1Z8]