Infosys Rating: Buy – A weak quarter for company in relative terms

Infosys reported relatively weak results for Q4FY21 with revenue up 2% q-o-q compared with the strong 4-5% growth for the past two quarters. However, the result doesn’t change our 14-15% growth expectation for FY22e as the company realises $14 bn in deal wins (TCV) in FY21 (up 57% y-o-y).

Guidance is for 12-14% y-o-y revenue growth in constant currency terms for FY22. The pipeline is healthy, according to Infosys, and a couple of large deal wins in FY22 could improve the visibility for FY23 as well. More importantly, the Ebit margin guidance of 22-24% is in line with our expectation and comforting in light of the impending margin headwinds. Pricing is stable as has been our view, and it is unlikely to change much going forward.