Infosys' $100 mn-plus clients rise to 40 in Q4: Management commentary, FY24 guidance, dividend & more

IT major Infosys on Thursday posted 7.8 per cent year-on-year (YoY) growth in net profit (after minority interest) at Rs 6,128 crore for the quarter that ended March 31, 2023. The figure stood at Rs 5,686 crore in the corresponding quarter last year. On a quarter-on-quarter basis, the figure increased by 7 per cent. The company announced its results after market hours. Total revenue increased 16 per cent YoY to Rs 37,441 crore from Rs 32,276 crore in the same quarter last year. Earlier during the day, shares of Infosys closed 2.79 per cent down at Rs 1,388.60. On the other hand, the benchmark BSE Sensex settled almost flat at 60,431.

Here are the key takeaways from Infosys' Q4 earnings:

Bonanza to shareholders

The company announced a final dividend of Rs 17.50 per equity share for the financial year that ended March 31, 2023 (FY23). Together with the interim dividend of Rs 16.50 per share already paid, the total dividend per share for FY23 will amount to Rs 34 which is a 9.7 per cent growth over FY22. With this, the company has announced a total dividend of around Rs 14,200 crore for FY23. The record date for the purpose of the final dividend is June 2, 2023. The dividend will be paid on July 3, 2023.

The company completed the open market share buyback on February 13, at an average price of around Rs 1,539 per share (compared to a maximum buyback price of Rs 1,850 per share). Consequently, the share capital of the company has been reduced by 1.44 per cent. Including the recently concluded buyback and final dividend for FY23, the company has returned 86 per cent of free cash flow to shareholders under the current capital allocation policy.

$100m-plus clients rise to 40

The company’s top 10 clients contributed 20.10 per cent to the revenues in the March quarter. On the other hand, the top 25 clients contributed 34.7 per cent to the company’s top line during the quarter under review. The company added clients in the $1 million (922 from 912), $10 million (298 from 294) and $100 million (40 from 38) segments on a sequential basis. The number of $50 million-plus clients declined to 75 from 79 on a QoQ basis.

Revenue per employee

Infosys' consolidated revenue per employee declined to $53,000 in the March quarter $57,700 in the same quarter a year ago. The figure stood at $54,200 in the sequential quarter Q3 FY23. The company had 3,43,234 employees as of March-end against 3,14,015 employees as of March 31, 2022. The figure stood at 3,46,845 at the end of December 2022. Voluntary attrition declined to 20.90 per cent in the January-March period from 27.70 per cent in the same quarter last year.

Operating profit

The company’s operating profit increased by 13.20 per cent YoY to Rs 7877 crore during the quarter under review. On the other hand, the figure declined by 4.4 per cent on QoQ basis. However, the operating profit margin declined by 6 basis points to 21 per cent in Q4FY23 from 21.6 per cent in Q4FY22.

Annual report card

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.

Management commentary

Salil Parekh, CEO and MD said, “Our strong performance in FY23 is a testimony to the continued focus on digital, cloud and automation capabilities which resonated with our clients. We have launched exciting programs with our clients leveraging generative AI platforms. As the environment has changed, we see strong interest from our clients for efficiency, cost and consolidation opportunities, resulting in a strong large deal pipeline. We have expanded our internal program on efficiency and cost to build a path to higher margins in the medium term. We continue to invest in our people and in supporting our clients.”

Guidance

The company gave revenue growth guidance of 4 per cent-7 per cent and operating margin guidance of 20 per cent-22 per cent for FY24.