Infosys Result Analysis Q1 FY20-21

Infosys Result Analysis Q1 FY20-21

Infosys Ltd.’s profit dropped even as deal wins and cost-cutting measures anchored the company in a quarter marred with challenges due to Covid-19. Net profit fell 1.5% sequentially to Rs 4,272 crore in the quarter ended June, according to its exchange filing. 

Revenue rose 1.7% over the previous quarter to Rs 23,665 crore—higher than the estimated Rs 22,957 crore. Dollar revenue fell 2.4% to Rs 3,121 crore. Operating profit rose 8.9% to Rs 5,365 crore. Margin expanded to 22.7% from 21.2%.

The April-June period was the first full quarter that captured the impact of business uncertainty from the pandemic. The world’s biggest lockdown to contain the novel virus froze all economic activity, barring essential services. That led to a rise in costs for IT companies as most of their employees worked from home.

Infosys was able to offset that impact by winning new contracts and implementing cost cuts to maintain its revenue and operational profitability. Large deal wins during the quarter stood at $1.74 billion—higher than the $1.65 billion worth of deals it won in the previous three months. The depreciation of the rupee also helped.

Segment wise performance QoQ

BFSI - 2%

Communications - 4.9%

Retail - (6.4%)

Energy- 1.2%

Mfg - (4.5%)

Hi-Tech - 12.7%

CMP Rs 901 (As on 17-07-2020 at 02:51 PM)

Operating margin for FY 21 to be in the range of 21%-23%
TCV($ MN) came at $ 1744 Mn vs expectation of $ 0 Mn, QoQ $ 1646 Mn, YoY $ 2714 Mn

Revenue growth in CC terms QoQ came at -2% vs expectation of -5.1%, QoQ -0.8%, YoY 2.8%

Dollar revenue came at $ 3121 Mn,(-2.4% QoQ, -0.3% YoY) vs expectation of $ 3033 Mn, QoQ $ 3197 Mn, YoY $ 3131 Mn

Net sales came at Rs. 23665 Cr (1.7% QoQ, 8.5% YoY) vs expectation of Rs. 22957 Cr, QoQ Rs. 23267 Cr, YoY Rs. 21803 Cr

EBIT came at Rs. 5317 Cr (7.9% QoQ, 20% YoY) vs expectation of Rs. 4767.8 Cr, QoQ Rs. 4927 Cr, YoY Rs. 4431 Cr

EBIT Margin came at 22.5% vs expectation of 20.8%, QoQ 21.2%, YoY 20.3%
Adj. PAT came at Rs. 4233 Cr vs expectation of Rs. 3941.1 Cr, QoQ Rs. 4366 Cr, YoY Rs. 3798 Cr

Quarter EPS is Rs. 9.9

Stock is trading at P/E of 21.8x FY21E EPS

Managment comment

Infosys remains optimistic. “Our confidence and visibility for the rest of the year is improving driven by our Q1 performance and large deal wins,” said Chief Executive Officer Salil Parekh in the media statement.

Impact: Result is above expectation due to various cost cutting mesaure bottomline and margin improved and this can continue in next two quarter as well. Keep hold for long term investors.

Analysis: Good company for long term Investment, Buying can be initiated in range of Rs 800 to Rs 850. 

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

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