Infosys Q4 Results Surprise The Market

IT major Infosys declared its Q4FY14 scorecard. The company's result were better than the street expectations and the stock was up by more than 3% post the announcement of the results.

Infosys posted 4.1% growth in its bottomline to stand at Rs 2992 crore in Q4FY14 as against Rs 2875 crore reported in the previous quarter Q3FY14. The revenues dropped by 1.2% to Rs 12875 crore in Q4FY14 against Rs 13026 crore on a sequential basis. The growth in net profit is predominantly due to the de-growth of 2.5% in cost of sales on sequential basis. Interestingly, the Q4FY14 operating margin showed expansion of 50 basis points sequentially to 25.5%. On positive front, the company gave FY15 revenues guidance of 7%-9% in USD terms and 5.6%-7.6% in INR terms which is better that street expectation. On yearly basis, Infosys posted a revenues growth of 23.2% and a net profit growth of 25% during the last quarter.

In dollar terms too, Infosys showed a net profit growth of 5.2% to USD 487 million in FY14 on sequential basis. The company's revenue de-grew by 0.4% to USD 2092 million in FY14 on yearly basis. The company's operating income showed a 1.5% growth in FY14 on yearly basis.

On geographic distribution front, Infosys showed decrease in revenue from North America to 59.8% in Q4FY14 against 60% in Q3FY14. The revenue from Europe showed an increase to 25.2% in Q4FY14 against 24.9% in Q3FY14. On the other hand, the revenue from India and Rest of the World remained almost at same levels and stood at 2.6% and 12.4% respectively during Q4FY14. On industry front, the company revenue from BFSI, Manufacturing, Retail & Life sciences and Energy, Utility, Communication & Services were at the same levels of Q3FY14 and stood at 33.5%, 23%, 23.8% and 19.7% per cent respectively.

Infosys has declared a final dividend of Rs 43. considering the interim dividend during the financial year 2014, the total dividend amounts to be Rs 90 and the dividend yield ratio comes out to be 2.74%. Though the attrition percentage increased to 18.7% in Q4FY 14 against 18.1% in Q3FY14, the results seems to be better than street expectation with surprise of better revenue guidance for FY15 in dollar terms. We also expect Infosys will be the market performer despite of risk of rupee appreciation for next one year.