Infosys posts 8% growth in net profit for Q4 FY23, gives muted outlook
The uncertainty in its key markets of the US and Europe led Infosys to register a below-par performance for the fourth quarter of FY23.
on Thursday reported a 7.8% year-on-year (YoY) rise in net profit to touch Rs 6,128 crore for the fourth quarter of FY23.
The performance of India’s second-largest IT services exporter for the January-March 2023 quarter was well below market expectations on both revenue and profitability. It reported a revenue of Rs 37,441 crore for Q4 FY23, which was an increase of 16% YoY. However, the revenue and profits declined sequentially by 2.3% and 7%, respectively, from the previous October-December 2022 quarter.
In addition, the company estimated an annual revenue growth in the range of 4-7% for FY24 in constant currency terms—a pessimistic outlook considering it actually registered 18% growth in FY23.
This lacklustre performance was attributed to the macroeconomic challenges in North America and Western Europe, and certain undisclosed client accounts.
While announcing the quarterly earnings, Infosys CEO Salil Parekh said, “There were unplanned project ramp-downs and delays in decision-making. The environment remains challenging.”
Infosys follows a similar trend as its business rival, Tata Consultancy Services (TCS), which also gave a muted outlook for the current financial year.
The uncertainty in the overall business environment is quite likely to lead Infosys to a single-digit growth rate in the present financial year. Additionally, it does not expect any major uptick in its operating profit margin. Closing Q4 FY23 with 21% growth in the operating margin, Infosys expects to the metric to hover at a similar 20%-22% for the current financial year.
The IT giant was impacted the most when it came to its employee strength as the layoffs in the present macroeconomic environment led to a decline in its workforce. At the end of the fourth quarter, it saw a reduction of 3,611 employees; the decline numbered 4,480 if one takes into account only the software professionals.
At the same time, the company did not specify the number of fresh engineering graduates it was planning to induct during the course of this financial year.
Its share price ended at Rs 1,383.40 on Thursday, which was a decline of 3.14%.
The only positive for Infosys has been its deal pipeline, which stood at $9.8 billion. However, one needs to take this with a pinch of salt as these numbers only show the potential inflow and don't hint at any real revenue generation.
For FY23, the board of Infosys has recommended a final dividend of Rs 17.50 per share. Together with the interim dividend of Rs 16.50 per share already paid, the total dividend per share for the financial year amounts to Rs 34, which is a 9.7% increase over FY22.
The top management was hopeful that the business environment would turn out for the better in the near future as IT projects were still available but there is a delay in decision-making.
Edited by Kanishk Singh