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Infosys: A Decent Start to FY18 - Views on News from Equitymaster
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Infosys: A Decent Start to FY18
Jul 14, 2017

India's second largest software firm Infosys has announced its first quarter results for FY18. The company has reported a 0.2% QoQ fall in sales and a 3.7% QoQ growth in the net profit.

Performance summary
  • In rupee terms, consolidated sales decreased by 0.2% QoQ during 1QFY18. In US dollar terms, sales were up 3.2% QoQ and in constant currency terms sales were up 2.7% QoQ. Volumes were up 1.7% QoQ.
  • Operating profit was down 2.2% QoQ. The operating margin fell to 26.7%.
  • The other income was higher by 9.1% QoQ while the profit before tax (PBT) was down 2% QoQ.
  • The consolidated net profit came in at Rs 35,480 million, an increase of 3.7% QoQ.
  • The company is in the process of getting regulatory approvals to return Rs 130 billion to shareholders.

    Consolidated Financial Snapshot
    (Rs m) 4QFY17 1QFY18 Change
    Sales 171,200 170,780 -0.2%
    Expenditure 124,620 125,220 0.5%
    Operating profit (EBITDA) 46,580 45,560 -2.2%
    Operating profit margin (%) 27.2% 26.7%  
    Depreciation & Amortisation 4,460 4,450 -0.2%
    Other income 7,460 8,140 9.1%
    Profit before tax 49,580 49,250 -0.7%
    Tax 13,300 13,710 3.1%
    Profit after tax/(loss) 36,280 35,540 -2.0%
    Share in associate's profit/(loss) 250 710  
    Other Comprehensive Income -1,810 650  
    Net Profit 34,220 35,480 3.7%
    Net profit margin (%) 21.2% 20.8%  
    No. of shares   2,296.9  
    Diluted earnings per share (Rs)*   61.7  
    P/E ratio (x)*   16.0  

    *On a trailing 12 months basis


    Segmental Performance
    Rs m 4QFY17 1QFY18 Change
    By service offerings      
    Application development 26,194 26,300 0.4%
    Application maintenance 28,762 28,520 -0.8%
    Business Process Management 8,731 8,539 -2.2%
    Infrastructure Management Services 14,552 14,346 -1.4%
    Product Engineering Services 6,848 7,002 2.2%
    Testing Services 15,408 15,883 3.1%
    Others 5,478 5,294 -3.4%
    Total IT services 105,973 105,884 -0.1%
    Consulting, Package Implementation & Others 55,811 55,674 -0.2%
    Products, Platforms and Solutions 9,416 9,222 -2.1%
    Total Revenues 171,200 170,780 -0.2%
    By new services and software      
    New Services (Cloud, Analytics, API, IoT, Cyber Security) NA 14,175 NA
    New Software (Edge, NIA, Panaya, Skava) NA 2,732 NA
    By industry vertical      
    Banking and Financial Services 46,909 46,281 -1.3%
    Insurance 10,443 10,588 1.4%
    Manufacturing & Hi Tech 38,349 37,913 -1.1%
    Retail & CPG 24,139 24,251 0.5%
    Telecom 16,949 17,761 4.8%
    Energy & Utilities 8,560 8,881 3.7%
    Transportation & Logistics 3,424 3,245 -5.2%
    Lifesciences & Healthcare 11,299 11,271 -0.2%
    Others 11,128 10,588 -4.8%
    By geography      
    North America 106,658 104,347 -2.2%
    Europe 37,835 38,255 1.1%
    India 5,478 6,148 12.2%
    Rest of world 21,229 22,031 3.8%
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INTRODUCTION:
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.
  3. Equitymaster's investment in the subject company is as per the guidelines prescribed by the Board of Directors of the Company. The investment is however made solely for building track record of its services.
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