*Infosys (Buy): Topline beat and unexpected guidance increase*
# USD CC rev of $4.44bn, *+5.5% QoQ in CC, above our estimate of 3.9% QoQ*. Reported USD growth was +3.8% QoQ
- Driven by ENU, Manufacturing, Comm. and Retail (retail bounced back strongly after weak Q4)
# *EBIT margin of 20.1%, down 150bps QoQ vs 20.8% est.*
- Higher employee cost (240bps, including *wage hike impact of 160bps and 21k net adds*), 230bp utilization drop (40bp margin impact)
- Sub-con (+5.9%QoQ/51.4% YoY) added 20bps to the impact
# *Guidance (unexpected change): FY23 revenue growth guidance revised up to 14-16% (from 13-15% YoY earlier) in CC. Margin guidance moved to lower end of 21-23% range*
# Attrition (LTM) up 70bps QoQ to 28.4%
# *Large deal TCV of $1.7bn, down 26% QoQ/34% YoY*
# Net profit of 54bn, down 6% QoQ and lower than our 57bn est. due to higher tax rate
*Key Highlights from Press Conference*
# Expect Margin to be on lower end of guided range of 21-23%. Are ready to invest for growth
# Attrition dropped on quarterly basis. Sub-con, Utilization and automation key margin levers.
# Seeing impact of macro in a few pockets (eg. Mortgage), but overall not seeing anything concerning. Demand outlook is good across US and Europe for large deals
# Saw good volume growth in the quarter and expect good volumes and deals for 2QFY23.
# People are not asking for discounts, and INFY is giving COLA clauses in contracts. Pricing is stable and seeing no positives or negatives