July 19, 2024
New Delhi, India
Infosys Q1 Results
Infosys, India’s second-largest IT services firm, announced its Q1FY25 results on July 18, showcasing a 3.64% increase in revenue and a 7.12% rise in profit Year-over-Year (YoY). Despite a quarterly decline in profit, the company’s performance was bolstered by significant deal wins and improved operating margins.
Quarterly Financial Performance:
Infosys reported a net profit of Rs 6,368 crore for Q1, a 7.12% increase from the previous year. However, profit fell 20.09% from the previous quarter due to a tax refund boost in the preceding period. Revenue for the quarter grew by 3.64% YoY to Rs 39,315 crore.
Expenses and Margins: Selling, general, and administrative expenses increased by 5.5% QoQ and 7.96% YoY. Operating income saw an increase of 8.75% QoQ and 5.03% YoY. The Earnings Per Share (EPS) stood at ₹15.35, reflecting a 5.78% increase YoY. The EBIT margin was up 30 basis points to 21.1%, with the company maintaining its operating margin guidance of 20-22% for the year.
Also Read: Q1 Results: Paytm Reports Net Loss of Rs 839 Crore; Revenue Drops 36%
Revenue Growth Guidance: Infosys raised its revenue growth guidance for FY25 to 3-4%, a surprise move as analysts had expected the company to maintain a 1-3% range. This adjustment follows a series of revised forecasts over the past five quarters, with a previous reduction to 1.5-2% in January.
Deal Wins and Cash Flow: The company achieved its highest-ever deal wins with 34 large deals totaling $4.1 billion, 57.6% of which were net new. Infosys also reported its highest-ever free cash flow of $1.1 billion and a return on equity of 33.6%, attributed to increased payouts to investors.
Operational Metrics: Infosys’ utilisation rate, excluding trainees, increased to 85.3% from 83.5% in the previous quarter. Offshore utilisation also rose to 76.1% from 75.8%. These improvements are expected to positively impact margins.
Geographic Performance: The India region’s revenue share increased by 90 basis points to 3.1%, while the North American region’s share declined by 70 basis points to 58.9%. Europe’s share also saw a slight decrease to 28.4%.
Vertical Performance: Financial services was the only major vertical to show growth, increasing by 110 basis points sequentially to 27.5%. Conversely, revenues from retail, communication, energy, utilities, resources & services, and hi-tech sectors declined. The manufacturing sector remained stable.
Executive Commentary: Salil Parekh, CEO and Managing Director, highlighted the company’s strong start to FY25 with robust growth and margin expansion. He noted that while discretionary spending remains low, Infosys’ focus on Generative AI and strategic service offerings continues to gain client traction.
Headcount and Cost Management: Infosys’ headcount decreased for the sixth consecutive quarter, down by 1,908 to a total of 3,15,332 employees. CFO Jayesh Sanghrajka emphasized the impact of Project Maximus on margin expansion and cost optimization.
Bottom Line:
Infosys’ Q1FY25 results reflect a solid performance with a rise in profit and revenue, coupled with strong deal wins and improved cash flow. Despite some challenges in profit margins and discretionary spending, the company remains optimistic about its growth trajectory and operational efficiencies.
Currency Market Update July 19, 2024
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