INFOSYS – NO GUIDANCE BUT Q1 LOOKS BLEAK
The lockdown began towards last two weeks on March; after than entire of April and we don’t know about May but most likely, most of that month will also go by. If all things go well, it is only by 15th June that we are looking at some sense of normalization; a new normal.
So Infosys had almost the entire of Q4; only last two weeks were under stress and that in itself has impacted the performance. That makes us wonder about Q1FY21 and going further into Q2; when we see the earnings now, we get a sense that it is only towards second half that we will see Infosys get back its mojo, so to say.
Infosys posted a flat revenue, with less than 1% (QoQ) rise in revenue at Rs.23,267 crore while that in dollar term, fell 1.5% at $3197 million. Net profit was down 3% at Rs.4335 crore.
Operating profit or EBIT was down almost 3% at Rs.4927 crore while margins declined 70 bps to 21.2%.
The company said that it has already suspended promotions and salary hikes, frozen all hiring though it said that it not firing people. It also said that it will also honour all job offers which it has made. As at 31st March 2020, the company had 2,42,371 employees v/s 2,28,123 at end of FY19. Currently, 93% of the Infosys global workforce is now working from home
As expected, like Wipro, the company categorically stated that it will not give any guidance on revenues and margins at this point of time for FY21; it will do so as and when the visibility improves.
Last week, TCS reported a much better performance but did mention that next two quarters in current fiscal will be difficult. Wipro also warned of high pressure on its margins in Q1 and would optimize costs the same way – no new hiring, no salary increases. Like Infosys, TCS is also not planning to lay off any employees and would be honouring the job offers made to some 4000 candidates. Wipro too does not plan to cut employee strength.
Thus the top three have announced their results and more than Q4, it gave us an insight into what could be the likely scenario in the months ahead. Based on the commentary of all the three, Q1FY21 is going to be very tough and we can talk about Q2 only after the economy opens up. For IT companies, looks like first half is a write-off.