Bengaluru-headquartered Infosys saw a 1.7% year-on-year decline in net profit to ₹6,106 crore for October-December 2022 quarter (Q3 FY23) amid tepid 1.3% revenue growth. It has also tightened full-year revenue outlook given uncertain demand climate.
Muted 1.3% Revenue Rise
Infosys posted revenues of ₹38,821 crore in Q3, up 1.3% versus last year. However, revenue dipped 0.4% on quarterly basis due to seasonal weakness in discretionary tech spending by clients.
Performance reflects dampened enterprise IT budgets as worries over global recession prompt companies to curtail discretionary tech projects and prioritise automation.
Net Profit Drops 1.7%
Consolidated net profit fell 1.7% year-on-year and 1.3% sequentially to ₹6,106 crore, missing market estimates. Operating margin also declined 30 basis points to 20.5%.
“Clients are focused on cost efficiency and automation over large digital deals in uncertain times,” said CEO Salil Parekh. But he sees interest in areas like AI.
Cuts FY23 Revenue Outlook
Infosys narrowed its FY23 revenue growth guidance to 1.5-2% from 1-2.5% earlier. The revision indicates it sees stability returning in coming quarters as new deal momentum continues.
But the revised outlook still marks a major drop versus stellar 19.7% growth in previous fiscal year. Infosys retained operating margin guidance at 20-22%.
The country’s second-largest IT services firm is bracing for potential cutbacks from clients amid recession worries in key markets. But its digital and cloud services should provide cushion while enabling internal cost savings.
“Management commentary indicates stable outlook, though focus shifts to earnings growth recovery in FY25/26,” said analyst Sanjeev Hota of Sharekhan BNP Paribas.
