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Infosys Q2 Results Review – Guidance Intact But Ask Rate Conservative In View Of Macro: Dolat Capital

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Infosys Ltd. reported revenue growth of 4.0% QoQ in constant currency terms (our estimate: 4.5%). Financial services and retail saw moderate growth of 2.2%/0.4% respectively, reflecting pockets of slowness in mortgage and fashion and general merchandisers. Manufacturing grew 8.4% QoQ on smart product/ smart factory theme.

Operating profit margin expanded 149 bps QoQ at 21.5% (our estimate: 21.0%), with contribution from forex (up 70 bps), cost optimisation (up 90 bps), and gains from lower subcon that covered up for senior employee compensation hike impact.

Infosys announced dividend of Rs 16.5 and buyback size of Rs 93 billion at a maximum price of Rs 1,850/share – thus exceeding committed payout.

Riding through volatile macros beyond FY23 will be challenging and likely to see moderation in financial performance, though management commentary remains optimistic.

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