Infosys: Temporary blip or Trend reversal?

Q4FY21 earnings of Infosys were disappointing on both, on revenue and operating margin front – QoQ constant currency revenue growth slowed to 2% over 5.3% reported in the Dec quarter. Operating profit margin slipped 90 bps to 24.5% from 25.4% sequentially. Infy is also facing an abnormally high attrition at 15%, which is a sharp jump from 10% in Q3 and 7.8% in Q2.

On all these three parameters, TCS scores an edge, with 4.2% cc revenue growth in Q4FY21, 26.8% operating margin and attrition rates at decade low of 7.2%. For FY22 through both these IT giants guide for double digit revenue growth.

Over 9MFY21, Infy’s performance was much stronger than TCS and former closed FY21 with 27% revenue growth over TCS’ 4.6%. But for now, the question remains – are Infy’s Q4FY21 results just a temporary blip or a trend reversal at India’s second largest software company?  

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