Infosys

Infosys Q4 FY25 – Hostile macro takes a toll A steep decline in revenues and muted guidance Highlights All-round disappointment in Q4FY25 Revenue for Q4 nosedives and guidance bakes in caution Margin weaker than expected Order inflows steady but client matrix deteriorates What to do with the stock after its steep fall? For Infosys (CMP: Rs 1419.5, Market Cap: Rs 589,555 crore, Rating: Overweight), Q4FY25 turned out to be a quarter of all-round disappointment, principally on account of the deteriorating macro environment. Contrary to our and Street’s expectations of a marginal downtick, the revenue decline was steep, guidance muted, margin a tad weaker, and order inflows uninspiring with a deterioration in the client matrix. However, post the steep correction in the stock in the past three months, the valuation isn’t demanding, especially in the context of a decent dividend yield. The stock has the potential to recover once the macro cloud clears. We retain our rating and recommend a staggered addition on decline for patient long-term investors. Disappointing execution and guidance The Q4 execution turned out to be disappointing – revenue de-grew 4.2 percent in reported currency and 3.5 percent in Constant Currency (CC). The management attributed the sharp decline in revenue to lower third party contracts as also to the usual seasonality (lower number of working days) in Q4. In terms of markets, except for Europe, the other three de-grew. Turning to industries, weakness was seen across the board.