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ICICI Securities Report
Infosys has reported a revenue decline of 2% QoQ in constant currency (CC) terms. However, revenue was up 1.5% on a YoY basis whereas TCS and Wipro reported a YoY decline of 6.3% and 4.4% respectively with digital revenue growing 25.5% in first quarter of financial year 2021. The company also guided for a revenue growth between 0-2% in FY21 in CC terms. Supply-side execution was solid considering 99% of the workforce was enabled to work from home and supply-side issues had more than 10% impact on revenue decline on a QoQ basis.
Margins also surprised positively with approximately 160 basis points QoQ increase to 22.7% with key tailwinds being currency, sub-con cost rationalisation, pyramid improvement and tight control on discretionary costs. Superior execution was reflected in strong new Total Contract Value deals worth $1.7 billion in Q1FY21. Voluntary attrition reached a multi-quarter low of 11.7%. The company also had a healthy cash conversion with Free Cash Flow and Net Income being approximately 130% in Q1.
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