Infosys Stocks Profit Ideas 

Infosys Stocks Profit Ideas
Infosys Stocks Profit Ideas 

Hi Guys, ideas for profit the spotlight is on INFOSYS performance. Technology is presenting unprecedented opportunities for it companies and it's heartening to see the execution engine running in full throttle amid tremendous supply side pressure as demand for talent far outstripped supply.

Key Result Highlights

1. Strong broad-based revenue acceleration

2. Operational efficiencies

3. Strong commentary on demand

4. Management increases guidance

This was the central theme of infeeds earnings report as well strong broad-based revenue acceleration operational efficiencies shielding margins despite supply challenges and strong commentary on demand prompted in fees management
to revise its guidance upwards now these were the key highlights of a seasonally strong quarter.

Infosys Stocks Profit Ideas
Infosys Stocks Profit Ideas 

With the stock underperforming the nifty and the it index in the past three months we see a catch-up in the stock performance and likely closure of the valuation gap with bellwether tcs the stock remains a great core portfolio company to be added on every decline. revenue of 3998 million dollars grew by 5.7 percent sequentially in reported and 6.3 percent in constant currency the best constant currency growth in the last 6 years.

The year-on-year growth of 19.4 percent in CC terms was the best performance scene in 11 years the growth was broad-based and key markets of north america and europe exhibited strong growth YoY as well as QoQ all 7 keys industrial verticals also saw sequential as well as YoY growth.

Manufacturing was especially strong thanks to the ramp up of the large deal from daimler strong execution robust deal pipeline and revenue visibility have prompted the management to increase the full year FY22 revenue guidance to 16.5 to 17.5 from 14 to 16 growth in constant currency terms indicated earlier we see the guidance hinting at a softer second half compared to the first half.

Infosys Stocks Profit Ideas
Infosys Stocks Profit Ideas 

The share of digital in total revenue grew to 56.1 percent and the same showed a YoY growth of more than 42% in constant currency higher share of digital is causing a positive rub-off on revenue per employee that has risen 7% YoY despite a wage hike causing 110 basis points drag on margins and supply crunch leading to higher outsourcing that pull down margins by another 50 basis points infosys managed to restrict the sequential margin decline to 10 basis points only.

What Aided Margins

1. Operating efficiency

2. Scale benefits on sales and marketing

3. Cross-currency tailwinds

Client metrics remain strong with the company adding clients in the 100 million dollar, 50 million dollar, 10 million dollar and even 1 million dollar bracket. the overall share of top 5 top 10 and top 25 clients in total revenue improved indicating market share gains due to better client mining and vendor consolidation meanwhile hiring continues to reflect optimism on the growth front the company added 15,000 pressures from campus in Q2 and plans to hire 45,000 freshers in the year up from its earlier target of 35,000.

The management expects pressure on margins in the near term from supply side challenges it's also affecting compensation revision for senior management and key talent in Q3 this coupled with seasonal revenue weakness of Q3 due to furloughs make the near-term outlook subdued. resumption of travel could also eat away some of the post-pandemic margin gains for the company hence retaining the margin guidance ban to 22% to 24% doesn't come as a surprise given the tight labor market the company saw steep spike in attrition from 13.9% to 20.1%.

Infosys Stocks Profit Ideas
Infosys Stocks Profit Ideas 

In the absence of mega deals the large deal wins which are greater than 50 million dollars at 2.15 billion looked rather muted and the share of net new deals at 37 was a bit unimpressive now if one were to compare infosys performance with that of tcs infosys has clearly stolen the show in the quarter with much superior growth and is fast closing in the earth's while wide valuation gap with tcs long-term investors should look beyond the noise of supply crunch the point to focus on is the multi-year technology upcycle which according to most industry leaders is just at the beginning .

While the sudden surge in demand has created a never seen before supply shortage with aggressive hiring of pressures and reskilling bulk of the problem should get addressed and stability is expected in a few quarters down the line we believe a market where demand outstrips supply large branded names are relatively better placed to attract talent as of now pricing is also stable going forward pricing uptick could emerge as a tailwind for margins.

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