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Infosys Q4FY21 Results Analysis | Yadnya Investment Academy

Infosys Q4FY21 Results Analysis | Yadnya Investment Academy

Published on 15 April 2021 Views 102 Comments 0

After TCS, IT Giant Infosys has also announced its Quarterly Result for Q4FY21. How was the performance of the company? What’s the important thing regarding the Buyback of shares? Let’s do a quick analysis.

Introduction: Infosys Value Research

IT major Infosys have announced its Q4FY21 results on 14th April 2021. In its board meeting, the company also informed regarding the Buyback of shares and quarterly results, which was the prime highlight of the board meeting.

Q4FY21 Results: Infosys Valuation & Infosys Annual Report

  • Revenue of the Company has increased from Rs. 23,267 Cr. In Q4FY20 To Rs. 26,311 Cr. In its Q4FY21 accounting to the growth of 13.1% YoY. Revenue of Infosys grew by 1.5% every quarter, and it was Rs. 25,927 Cr. In Q3FY21.

  • The market is a bit disappointed with the figures of revenue presented by the company on its quarterly results.

  • Infosys has also recorded growth in the cost of sales of 10.7% YoY along with revenue growth. The cost of sales has increased from Rs. 15,501 Cr. In Q4FY20 To Rs. 17,164 Cr. In Q4FY21. Sequentially it has grown by 2.3%.

  • The cost of sales has exceeded the revenue growth in Q4FY21. Revenue Growth for the period was up by 1.5%, but at the same time, the cost of sales was up by 2.3%. An increase in the price of sales might be due to salary hikes and bonuses to the employee.

  • The company has not been able to expand its gross profit in comparison to last quarter. But year on year, Gross Profit of the company has gone up by 17.8% from Rs. 7,766 Cr. In Q4FY20 to Rs. 9,147 Cr. In Q4FY21.

  • Selling and marketing expenses have gone up by 2.4% YoY from Rs. 1,172 Cr. In Q4FY20 to Rs. 1,200 Cr. In Q4FY21. These expenses were Rs. 1,145 Cr. In the previous quarter.

  • The company has reported a decrease in Administrative Expenses by 9.6% YoY from Rs. 1,667 cr. In Q4FY20 to Rs. Rs. 1,507 Cr. On Q4FY21. These expenses have also increased by 6.4% QoQ.

  • Overall the Total Operating Expenses of the company are down by 4.6% from Rs. 2,839 Cr. in Q4Y20 to Rs. 2,707 Cr. in Q4FY21. Sequentially, the Operating Expenses of Infosys have increased by 5.7%.

  • The Operating Profit of Infosys is up by a sizeable 30.7% YoY and currently stands at Rs. 6,440 Cr. Same has gone down by 2.3% quarter on quarter. Operating profit was at Rs. 6,589 Cr. in the previous quarter.

  • The Operating Profit Margin for the Q4FY21 is 24.5%, up by 3.3% from an OPM of 21.2% in Q4FY20. But the company has witnessed a downfall of 0.9% in OPM in Q3FY21.

  • Infosys Growth Rate is 17.5% YoY from Rs. 4,321 Cr. in Q4FY20 to Rs. 5,076 Cr. in Q4FY21. But here also, the company’s net profit has tumbled by 2.3% quarterly. Net Profit of the company was Rs. 5,197 Cr. in Q3FY21.

  • An increase in the company’s EPS at the current market price may result in a PE ratio.

  • Infosys Dividend was Rs. 15 per share.

Buyback of Shares: Infosys Share Price 

Infosys has announced a Buyback of Rs. 9,200 Cr. in its board meeting held on 14th April 2021.

  • Overall, the Buyback must account for around 1.75%-2% of the total equity.

  • The Company has announced buyback of shares at a 25% premium over its current market price at the maximum cap of Rs. 1,750.

  • This buyback by Infosys will be an Open Market Buyback.

Difference between Open Market Purchase or Tender Buyback: 

  • First of all, the Buyback announced by Infosys is an Open market purchase and not a Tender Buyback.

  • In an Open market purchase, the particular stock price will be decided by the market forces. Here, Company will not purchase

  • The company has set up Rs. 1,750 per share as the upper ceiling of the buyback of shares.

  • Since it is not a Tender Buyback, an investor should not have a thought process of purchasing shares of Infosys, which is hovering around Rs. 1,350- Rs. 1,400 and will offer the same to the company at Rs. 1,750/- per share.

Conclusion: Infosys Share  Value & Infosys Growth 

Looking at the consolidated result of Infosys, it has disappointed in sequential terms but has shown remarkable growth every year. Since all the IT companies are trading at a premium valuation in their historical averages, there is a risk of consolidation in the IT sector. Also, concerning the buyback of shares, one should not get confused and must know that it is an Open Market Buyback and not a Tender Buyback and hence should not eye for short-term gain via offering shares for the buyback.

 

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