Unplanned project ramp downs, delays in decision making resulted in lower volumes in Q4: Infosys

In the fourth quarter, Infosys witnessed a decline in volumes due to unplanned project ramp downs and delays in decision-making among some of its clients, CEO and Managing Director Salil Parekh said at a press conference following Q4 results announcement.

“In Q4, we saw changes in the market environment. During the quarter, we saw unplanned project ramp downs in some of our clients and delays in decision making, which resulted in lower volumes. In addition, we had some one-time revenue impact. While we saw some signs of stabilisation in March, the environment remains uncertain. This led to a Q4 year-on-year (revenue) growth of 8.8 per cent in constant currency and quarter-on-quarter decline of 3.2 per cent. Our operating margin was resilient at 21 per cent for the quarter,” Parekh said.

Unplanned project ramp downs were observed across different sectors during the quarter, including telecom, hi-tech, retail, and within financial services, particularly in mortgages, asset management, and investment banking, he added.

On an earnings call, Infosys' Chief Financial Officer Nilanjan Roy explained that the one-time revenue impact experienced by the company during the quarter was caused by a combination of cancellations and client-specific issues.

Infosys, the second largest IT firm by sales, on Thursday reported a 7.8 per cent year-on-year (YoY) rise in consolidated net profit at Rs 6,128 crore for the March quarter compared with Rs 5,686 crore in the same quarter last year. Analysts were expecting a profit growth of 15 per cent. It reported a 16 per cent YoY jump in consolidated sales at Rs 37,441 crore compared with Rs 32,276 crore in the same quarter last year. Analysts were expecting sales growth for the Bengaluru-based technology major at 20 per cent. Dollar revenue for the quarter came in at $4,554 million, down 2.2 per cent QoQ. In constant currency terms, revenue de-grew 3.2 per cent on a sequential basis. Digital revenues accounted for at 62.9 per cent of total revenues.

The company’s operating profit increased by 13.20 per cent YoY to Rs 7,877 crore during the quarter under review. On the other hand, the figure declined by 4.4 per cent on QoQ basis. The operating profit margin declined by 6 basis points to 21 per cent in Q4FY23 from 21.6 per cent in Q4FY22. The consolidated revenue of the company increased by 20.7 per cent YoY to Rs 1,46,767 crore for FY23. On the other hand, net profit (after minority interest) declined 9 per cent YoY to Rs 24,095 crore.