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INFY Dec 2013 Results in Charts; Headcount Falls, Profit Soars



Infosys is one of the first to announce results and usually does so in spectacular detail. This gives us a lot of fodder for charts. Here’s what it did in December 2013.

A quick summary:

  • Revenues were flat from previous quarter at 13,000 cr. but profits grew 20% (both QoQ and YoY)
  • For the first time, workforce headcount falls, but profit made through big increase in productivity.
  • The high profile exits haven’t halted profitability but seem to be a part of the overall increase in attrition in the company.

Profits Show Strength, Revenues Flatten Out


Profits are up on a lot owe

EPS Growth Still Anaemic, P/E Reaches 20

The stock went up 3% today and took the Price to Earnings Ratio to 20. EPS Growth, on a Trailing Twelve Month (TTM) level, went up just 7% from last year.


Employee Growth Falters, First Net Actual Attrition Number Seen


Infy has seen a number of high profile exits recently, and new names being elevated to top positions. However the attrition is company wide, and the company lost 1,900 employees from its workforce in the quarter.

Infosys charges for its services largely based on headcount, and a lowering headcount will only mean that future revenue growth might be impacted due to falling headcount and attrition. While tey

Utilization at 78% is among the highest in the last three years. This has resulted in an increase in profits, but it’s also been because their staff costs were down this quarter by Rs. 400 cr. (7300 cr. versus 7700 cr in Sep 2013).

This situation may be temporary as Infy cleans up its act and gets rid of employees that can’t or won’t stay.

Infy Gets De-Americanized Some More

A bulk of revenues have come from North America, but Infosys seems to be moving towards a more global presence and concentrating less on the US and Canada.


And In The End…

I think this is a good result for the IT industry. However, Infosys is not the best company to play the sector. In the large caps, HCL Tech, TCS and even Tech Mahindra are more aggressive and are likely to have done better.

The midcap IT space should also outperform correspondingly.

Infy has 25,000 cr. of cash, and if they show the ability to make bigger acquisitions and move to models where they are less dispensable in the new-age cloud and lower infrastructure businesses, it can move to be a very big company.

A part of their big profits this quarter was due to the depreciation of the rupee (10%), and the cutting down of staff expenses. These can’t be expected to continue at the same pace, so Infy has to grow revenues in order to be able to compete.

The sector, though, continues to stay very attractive in the medium term as an investment. It’s obvious this is not going to be a one-off result – everyone’s likely to have made good money in the last quarter.


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