Infosys CEO and MD Salil Parekh. , Photo credit: The Hindu
Infosys on Thursday said it reported an 8% year-on-year rise in fourth quarter net profit at ₹6,128 crore. Profit fell 7% compared to the previous quarter. The company has projected a weak revenue growth of 4-7% for FY24, citing uncertain market conditions.
Revenue rose 16% to ₹37,441 crore in the fourth quarter from a year ago. But compared to December 2022 quarter slipped 2.3%. In dollar terms, revenue declined 3.2% to $4.55 billion compared to the year-ago period. Full-year revenue in dollars rose 15.4%, though the company had forecast 16-16.5% growth.
“Infosys delivered surprisingly weak numbers for the fourth quarter and missed Street estimates on all fronts due to unplanned project ramp-downs and cancellations across sectors,” said Sanjeev Hota, head of research at Sharekhan, BNP Paribas.
Salil Parekh, CEO & MD said the company saw a change in environment in Q4 as uncertainty still dominated the markets. “We have seen unplanned project ramp-downs with some of our customers due to delayed decision making and this has also resulted in lower volumes and a one-time revenue impact,” he added.
He said the impact in Q4 was visible in sectors such as telecommunications, hi-tech, retail and financial services and was mostly in mortgages, asset management and investment banking. Despite the challenges, he said, the company secured deals that have a total contract value of $2.1 billion and $9.8 billion in Q4 and the fiscal year, respectively.
While market uncertainty remains, he said, the deal pipeline was ‘extremely’ strong, with several mega deals and opportunities for cost efficiencies and consolidation. “We have expanded our internal program on efficiency and cost to pave the way for higher margins in the medium term,” he added.
Infosys reported an operating margin of 21% for FY23, while the margin contracted by 50 basis points sequentially during the fourth quarter.
“We are working on various cost optimization measures, such as changes in the employee pyramid and utilisation,” said Nilanjan Roy, chief financial officer.
He said automation will help margins, drive the right onsite-offshore mix, while focus on digital will also help. Mr Roy said the company was working with customers to find better pricing.
Infosys reported a drop in utilization from 88% to 80% as its bench size expanded in Q4.
“We have low utilization and adequate bench seating. People sitting on the bench are getting skilled and trained. We have an agile model of hiring from campuses as per demand,” Mr Roy replied to a query on recruitment in FY24. answered.
However, Infosys’ attrition fell to 20.9% in Q4. The company saw a net decline of 3,611 employees at the end of March, taking the total employee strength to 3,43,234.
(With PTI inputs)