Infosys has reported Q3 Results above street estimates.

Infosys-Q3 results

Profit rises: Infosys, India's second-largest IT firm reported a 12% on-year rise in consolidated profit to Rs 5,809 crore above street estimates. Analysts had estimated profit of Rs 5,701 cr. In the same period last year, the company reported a net profit of Rs 5,197 crore. On a sequential basis the profit increased by 7.2% from Rs 5,421. 

Revenue growth: The consolidated revenue from the operations jumped to Rs 31,867 crore, up nearly 23% on-year and 7.4 % from the previous quarter. Analysts had estimated revenue growth of 20%. Infosys’ digital revenues were 58.5% of total revenues. Among verticals, manufacturing, life science, communication, and financial services posted robust YoY growth in sales. Geographically, North America reported 21.3% on-year growth and India saw 38.4% growth from the year-ago quarter.

Revenue guidance: The company revised its revenue guidance for FY22 upwards to 19.5%-20% after the robust topline and bottom line performance. Earlier, the company had estimated growth at 16.5-17.5% in constant currency.

Operational margins decline: Operating margin fell 1.9% on the year and 0.1% QoQ to 23.5% but are still within the margin guidance of 22%-24%. EBIT for the quarter rose by 7.3% QoQ to 7,484 crore above street estimates. Free cash flow stood at $719 million, down 6.9% YoY.

New Deal: The company’s large deal flows remained strong with TCV of $2.53 billion in Oct-Dec 2021 quarter as compared to $2.15 billion in the previous quarter.

Attrition rate: During Oct-Dec 2021, Infosys saw a rise in attrition at the company. The voluntary attrition rate increased to 25.5% from 20.1% in the previous quarter. To address this the company has already announced in the last quarter that it is looking to expand the college graduates hiring program to 45,000 this year.

Dividend: The company has not announced any dividend this quarter.

Management Commentary: “Our strong performance and market share gains are a testament to the enormous confidence our clients have in us to help them in their digital transformation. We expect the healthy technology spend to continue with large enterprises progressing on their digital transformations,” said Salil Parekh, CEO and MD at Infosys.

Infosys Q3 Results Review:

Infosys has reported a strong Q3 performance with sequential growth in a seasonally weak quarter. The company was able to beat expectations on both toplines as well as the bottom line. Infosys outlined that its growth remained broad-based and deal momentum robust, with digital transformation rapidly scaling across verticals and regions. However, the margins slightly declined and the attrition rate has been quite high at 25%.

Despite the cost escalations driven primarily by supply-side challenges, the company delivered another quarter of healthy margins, with improved cost optimization, continued operating leverage, and a stable pricing environment. The share price closed 1.16% higher on Wednesday at Rs 1877.60 per share.