Infosys Q1 Review - Growth Momentum Drives Guidance Upgrade, Margin Slip Neutralises: Dolat Capital
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Dolat Capital Report
Infosys Ltd. reported a revenue growth of 4.8% QoQ in constant currency terms (our estimate- 2.7%) due to strong execution across verticals but witnessed 81 basis points QoQ contraction in operating profit margin to 23.7% (our estimate- 24.3%) on supply side impact (hiring, sub-con of about 130bps) that negated gains from improved utilisation (40bps), offshore shift and forex gains (10bps).
Strong Q1 performance has led to upgrade in growth guidance for FY22 by 200bps to 14%-16% in constant currency terms while OPM guidance has been kept unchanged at 22-24%.
Growth guidance gains were largely negated by OPM slip in the quarter as it signals further contraction given impending wage hike, rising discretionary spends and retaining costs (promotions, welfare cost, training).
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