Q4FY22 Results Impact: Index heavyweights Infosys, HDFC Bank slip up to 9% intraday; brokerage cites reasons

Shares of index heavyweights such as Infosys and HDFC Bank plummeted up to 9 per cent during Monday’s session on the BSE, after reporting below estimated fourth-quarter results for FY22.

Both Infosys and HDFC Bank hit their respective day's low levels on Monday intraday: PTI

Shares of index heavyweights such as Infosys and HDFC Bank plummeted up to 9 per cent during Monday’s session on the BSE, after reporting below estimated fourth-quarter results for FY22.

Individually, IT major Infosys plunged 9 per cent to touch the day’s high low level of Rs 1592.05 per share and India’s largest private lender HDFC Bank tumbled almost 3.5 per cent to hit day’s low of Rs 1413 per share on the BSE intraday trade.

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The weakness in Infosys’ shares is mainly due to below-estimated revenue and margin numbers, besides, it also reported mixed guidance. While for HDFC Bank, net interest income has been lagging in loan growth for 6 quarters and even net interest margin at 4 per cent is a 27-quarter low.

According to YES Securities, “The revenue and operating margin were below expectation for the quarter. However, we see it as one time blip, as it was due to many one‐offs. Overall performance for FY22 remained strong over 20 per cent revenue growth in USD terms.”

It added that the outlook remains strong led by a robust demand environment and that is also reflected in 13‐15 per cent revenue growth guidance in constant currency (CC) terms for FY23.

The brokerage expects certain costs related to travel and admin to come back but with an improving employee pyramid and moderation in employee attrition and maintain a Buy rating on the stock with a revised target price of Rs 2,018 per share at 27.5x on FY24E EPS.

Infosys on Wednesday reported a 12 per cent year-on-year rise in its consolidated net profit (after minority interest) at Rs 5,686 crore in Q4FY22 as against Rs 5,076 crore a year-ago quarter. While its revenue rose nearly 23 per cent to Rs 32,276 crore in Q4FY22 as against Rs 26,311 crore in Q4FY21.

For HDFC Bank, YES Securities said, “While management stated that it has deliberately chosen lower NIM to keep opEx and credit cost under control, a 2.3 per cent Net Interest Income growth quarter-on-quarter is disappointing.”

It added that the slippages declined sequentially but HDFC Bank chose to make contingent standard asset provisions, besides Loan growth was characterized by the whole-hearted pursuit of wholesale loans. YES Securities reiterated ADD rating on the stock with a revised price target of Rs 1668 apiece.

Similarly, HDFC Bank on Saturday has reported an almost 23 per cent rise in net profit to Rs 10,055 crore on an 8.07 per cent increase in total income to Rs 41,085.78 crore YoY.

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