Infosys Shares Hit Over 2-Year Low After Missing Q4 Profit Estimates

Introduction

Infosys, the Indian multinational information technology company, recently released its Q4 results for the financial year 2022. The company's profits fell short of analyst estimates, causing its shares to hit a two-year low. In this article, we will analyze Infosys' Q4 results and understand the factors that led to its poor performance.

Overview of Infosys

Infosys is a leading IT services and consulting company with its headquarters in Bangalore, India. The company was founded in 1981 and has a presence in over 50 countries. Infosys provides end-to-end services in application development, maintenance, and testing, as well as system integration, engineering, and consulting services to clients across various industries.

Infosys' Q4 Results

Infosys reported a consolidated net profit of Rs 5,078 crore for the fourth quarter that ended March 31, 2022, a decrease of 2.3% compared to the previous quarter. This was below analyst expectations of a profit of Rs 5,160 crore. The company's revenue grew by 2.9% to Rs 29,616 crore, but this too fell short of estimates.

Reasons for Poor Performance

Several factors contributed to Infosys' poor performance in Q4. Let's take a look at them one by one.

Impact of COVID-19

The ongoing COVID-19 pandemic has had a significant impact on businesses worldwide, and Infosys was no exception. The company faced challenges due to disrupted supply chains, delayed projects, and lower demand for its services.

Increase in Employee Costs

Infosys' employee costs increased by 4.7% in Q4, primarily due to salary hikes and higher hiring costs. The company hired over 33,000 employees in the financial year 2022, taking its total headcount to over 300,000.

Currency Fluctuations

Infosys' revenues are denominated in multiple currencies, and currency fluctuations can impact its financial performance. The appreciation of the Indian rupee against the US dollar and other major currencies impacted the company's Q4 results negatively.

Delayed Deal Closures

Infosys' deal closures were delayed in Q4, leading to lower revenue growth. The company's deal wins in Q4 was also lower than expected.

Impact on Infosys' Share Price

Infosys' poor Q4 results led to a sharp decline in its share price. The company's shares fell by over 9% to a two-year low of Rs 1,288.55 on the Bombay Stock Exchange (BSE) and by 9.4% to a two-year low of Rs 1,286.05 on the National Stock Exchange (NSE). The decline in share price wiped off over Rs 45,000 crore from Infosys' market capitalization.

Future Outlook

Despite the poor Q4 results, Infosys remains optimistic about its future prospects. The company expects to achieve double-digit revenue growth in the financial year 2023, driven by higher demand for its services, investments in digital capabilities, and a focus on operational efficiency.

Conclusion

Infosys' Q4 results fell short of expectations, primarily due to the impact of the COVID-19 pandemic, increased employee costs, currency fluctuations, and delayed deal closures. The decline in the company's share price reflects investor concerns about its future growth prospects. However, Infosys remains optimistic about the future and expects to achieve double-digit revenue growth in the financial year 2023.

FAQs

What is Infosys, and what does it do?

Infosys is a leading IT service and consulting company based in Bangalore, India. It provides end-to-end services

More:

Infosys Lowers Revenue Growth Outlook for FY23-24 Due to COVID-19 Uncertainties

Reference: https://www.ndtv.com/business/infosys-shares-hit-over-2-year-low-after-missing-q4-profit-estimates-3954109