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Infosys: A Flat End to FY17 - Views on News from Equitymaster
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Infosys: A Flat End to FY17
Apr 13, 2017

India's second largest software firm Infosys has announced its fourth quarter and full year results for FY17. The company has reported a 0.9% QoQ fall in sales and a 7% QoQ fall in the net profit for 4QFY17.

Performance summary
  • In rupee terms, consolidated sales decreased by 0.9% QoQ during 7QFY17. In US dollar terms, sales were up 0.7% QoQ and in constant currency terms sales the topline was flat sequentially. Volumes were up 1.2% QoQ.
  • Operating profit was down 2.3% QoQ. The operating margin fell to 27.2%.
  • The other income was lower by 9% QoQ while the profit before tax (PBT) was down 3.8% QoQ.
  • The consolidated net profit came in at Rs 34,220 million, a decrease of 7% QoQ.
  • The company declared a final dividend of Rs 14.75 per share.
  • The board has approved a formal capital allocation policy. The company will pay out 50-70% of net profit as dividend annually (including dividend distribution tax). The board has also earmarked Rs 130 billion for a buyback, the details of which will be declared later.

    Consolidated Financial Snapshot
    (Rs m) 3QFY17 4QFY17 Change FY16 FY17 Change
    Sales 172,730 171,200 -0.9% 624,410 684,840 9.7%
    Expenditure 125,060 124,620 -0.4% 453,620 498,800 10.0%
    Operating profit (EBITDA) 47,670 46,580 -2.3% 170,790 186,040 8.9%
    Operating profit margin (%) 27.6% 27.2% 27.4% 27.2%
    Depreciation & Amortisation 4,330 4,460 3.0% 14,590 17,030 16.7%
    Other income 8,200 7,460 -9.0% 31,230 30,800 -1.4%
    Profit before tax 51,540 49,580 -3.8% 187,430 199,810 6.6%
    Tax 14,460 13,300 -8.0% 52,510 55,980 6.6%
    Profit after tax/(loss) 37,080 36,280 -2.2% 134,920 143,830 6.6%
    Share in associate's profit/(loss) 0 250 30 300
    Other Comprehensive Income -290 -1,810 2,910 -2,780
    Net Profit 36,790 34,220 -7.0% 137,800 140,750 2.1%
    Net profit margin (%) 21.5% 21.2% 21.6% 21.0%
    No. of shares 2,296.9
    Diluted earnings per share (Rs)* 61.3
    P/E ratio (x)* 15.2

    *On a trailing 12 months basis


    Segmental Performance
    Rs m 3QFY17 4QFY17 Change
    By service offerings
    Application development 26,773 26,194 -2.2%
    Application maintenance 29,364 28,762 -2.1%
    Business Process Management 8,464 8,731 3.2%
    Infrastructure Management Services 14,855 14,552 -2.0%
    Product Engineering Services 6,736 6,848 1.7%
    Testing Services 15,718 15,408 -2.0%
    Others 5,182 5,478 5.7%
    Total IT services 107,093 105,973 -1.0%
    Consulting, Package Implementation & Others 55,965 55,811 -0.3%
    Products, Platforms and Solutions 9,673 9,416 -2.7%
    Total Revenues 172,730 171,200 -0.9%
    By industry vertical
    Banking and Financial services 46,983 46,909 -0.2%
    Insurance 10,537 10,443 -0.9%
    Manufacturing & Hi Tech 38,864 38,349 -1.3%
    Retail & CPG 25,219 24,139 -4.3%
    Telecom 15,718 16,949 7.8%
    Energy & Utilities 8,637 8,560 -0.9%
    Transportation & Logistics 3,455 3,424 -0.9%
    Lifesciences & Healthcare 11,918 11,299 -5.2%
    Others 11,400 11,128 -2.4%
    By geography
    North America 107,093 106,658 -0.4%
    Europe 38,346 37,835 -1.3%
    India 5,873 5,478 -6.7%
    Rest of world 21,419 21,229 -0.9%
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Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group. Equitymaster is a SEBI registered Research Analyst under the SEBI (Research Analysts) Regulations, 2014 with registration number INH000000537.

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  1. 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report.
  2. Equitymaster has financial interest in Infosys Limited.
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