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Infosys post Q4 earnings and FY18 guidance: What Analysis Says About?

The IT major on Thursday reported a consolidated profit at Rs 3,603 crore for the January-March quarter, de-growth of 2.8 percent from Rs 3,708 crore in previous quarter.

Infosys on Thursday reported a consolidated profit at Rs 3,603 crore for the January-March quarter, de-growth of 2.8 percent from Rs 3,708 crore in previous quarter. Revenue also fell 0.88 percent to Rs 17,120 crore on sequential basis.

The earnings, barring bottomline, missed analysts' expectations. Even its FY18 guidance was lower than estimates, but the announcement of Rs 13,000-crore payout through dividend or share buyback during the year and fall in attrition rate minimised losses in the share price. The stock fell 2.88 percent intraday.

"Unanticipated execution challenges and distractions in a seasonally soft quarter affected our overall performance," Vishal Sikka, CEO said.

Here's what analysts are talking about the company's results.

Citi said that the company’s Q4 results were marginally lower than estimates. It saw Q4 realisation decline of over 1 percent quarter on quarter in constant currency terms. Meanwhile, the FY18 EBIT margin at 23-25 percent is lower against the consensus of over 25 percent. The fourth quarter’s constant currency revenue was flattish quarter on quarter.

Morgan Stanley

Morgan Stanley said that the revenue was below its estimates. The guidance too turned out to be below its base case scenario. It implies a deceleration based on constant currency revenue growth as well as a growth of 2.1-2.9 percent QoQ over the next four quarters.

Motilal Oswal

Motilal Oswal believes that the FY18 constant currency guidance of 6.5-8.5 percent was slightly below its expectation of 7-9 percent. This marginally lower guidance seems an adjustment for Q4 revenue miss. The CC guidance implies a compounded quarterly growth rate (CQGR). On the payout policy, it feels that the act is only a terminology change.

Kotak Institutional Equities

Kotak Institutional Equities has an add recommendation for the stock. The research firm believes that key metrics were better than the headline numbers and that an increase in payouts was a positive. Overall, the business is moving in the right direction, but with interruptions. But the new deal signings were weak and needs close monitoring.

The company’s constant currency guidance is below the estimate of 0.9 percent. its FY18 revenue growth guidance implies CQGR Of around 2.2-2.8 percent over Q1-Q4FY18. It also expects 4-6% cut in FY2018-19 earnings estimates.


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