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.