Infosys Ltd's Q4FY18 consolidated net profit (adj.) declines 0.2% qoq to Rs3,690 cr : inline

India Infoline Research Team | April 13, 2018 17:20 IST

Infosys Ltd Q4FY18

Consolidated Results Q4FY18: (Rs in cr)

Q4FY18 QoQ (%)
Revenue 18,083 1.6
EBITDA 4,930 2.3
EBITDA Margin (%) 27.3 19
Net Profit (adjusted) 3,690 [0.2]
***EBITDA margin change is bps


Reco. Price


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Infosys reported in-line set of numbers for Q4FY18 on all fronts. Constant currency (cc) revenue grew by 0.6% qoq and US revenue came in at USD2,805mn, up 1.8% sequentially. INR revenue grew by 1.6% qoq to Rs18,083cr which is in-line with consensus estimate of Rs18,110cr. EBITDA stood at Rs4,930cr, up 2.3% qoq against consensus estimate of Rs4,922cr, EBITDA margin inched up by 19bp qoq to 27.3%. PAT declined by 28.1% qoq to Rs3,690cr. In Q3FY18, the company had a tax reversal of Rs1,432cr on Advance Pricing Agreement (APA) with US IRS. Adjusting for the tax reversal, PAT marginally de-grew by 0.2% qoq, which is in-line with consensus estimate of Rs3,711cr.

• The company has guided for 6%-8% in cc revenue growth for FY19. In Q4, digital revenues grew sequentially by 3.6% in cc terms. Digital offerings at USD2.79bn account for 25.5% of overall revenues
• Infosys has guided for FY19 EBIT margins in the range of 22%-24% cc vs. 24.3% in FY18 and at 100bps lower than FY18 guidance. Key reasons – a) It will focus on investing in digital areas where it is underinvested; b) It wants to foolproof the US talent hiring model started last year; c) The sales team will be revitalized to ensure accelerated deal wins; d) It is looking to repurpose its employees in the digital journey.
• BFSI revenues were up 0.1% in cc terms, smaller verticals like Energy & Utilities grew at 1.8% qoq cc
• Manufacturing & Hi-Tech was up 1.5% qoq cc while Retail & Life Sciences declined by 0.7% qoq cc
• Geographically, RoW grew by 6.3% qoq cc, North America was flat, up 0.1% qoq cc while India declined by 4.9% qoq cc
• Attrition rate inched up to 19.5% from 18.7% in Q3FY18. Utilization rate, including trainees, declined from 82.1% in Q3FY18 to 80.8% in Q4FY18
• Proportion of fixed price contracts declined marginally from 51.4% to 51.0% sequentially
• The board has approved the capital allocation policy where by 70 % of the free cash flow will be returned to shareholders
• The Board recommended a final dividend of Rs20.50 per share for FY18. A special dividend of Rs10 per share has been announced and the board has Identified an amount of upto approximately Rs10,400 crore to be paid out to shareholders in FY19
• Post the review, INFO has laid out its new strategy called “Navigating your next” which will be based on four pillars: a) Scaling the agile digital business , b) Energize the clients’ core from automation and AI through platforms like Nia, c) Reskilling employees and d) Localization within markets by scaling up local talent and building more local data centres
• Upon strategic review of its portfolio of businesses, the company initiated identification and evaluation of potential buyers for its subsidiaries, Skava and Panaya. Assets and liabilities in respect to these companies have been reclassified and presented as "held for sale"
• On reclassification, an impairment loss of Rs118cr (USD18mn) in respect of Panaya has been recognized in the consolidated profit and loss for the quarter and year ended March 31, 2018. The corresponding write down in the investment value of Panaya in the standalone financial statements of Infosys Ltd. is Rs589cr (USD90mn)

Technical View:

Infosys Ltd is currently trading at Rs. 1,116.55, down by 52.45 points or 4.49% from its previous closing of Rs. 1,169 on the BSE.
The scrip opened at Rs. 1,099.30 and has touched a high and low of Rs. 1,121.40 and Rs. 1,099 respectively. So far 22,58,069 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 50 DMA.

BSE 1,182.60 [1.15] ([0.10]%)
NSE 1,179.50 [3.70] ([0.31]%)

***Note: This is a NSE Chart



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