New Delhi: Infosys Ltd, India’s second-largest IT services exporter, on Thursday reported a near 5 per cent rise in its second quarter net profit and raised revenue guidance for the year on broad based recovery in demand particularly from its key financial industry clients.
Consolidated net profit of Rs 6,506 crore in July-September — the second quarter of current 2024-25 fiscal year — was 4.7 per cent higher than the year-ago earnings and 2.2 per cent more than the net profit in the preceding quarter, according to a company statement.
Technology services bellwether for the second consecutive quarter raised its revenue guidance for the full fiscal. It now expects constant currency revenue growth between 3.75 per cent and 4.5 per cent for the financial year April 2024 to March 2025, higher than its earlier guidance of 3 per cent to 4 per cent.
The company had raised its guidance in the June quarter from the 1 per cent to 3 per cent range it started the year with.
The upward revision comes on the back of a ramp-up of mega deals.
Importantly, the company, after six consecutive quarters of drop in employee strength, added about 2,500 employees on a net basis in the September quarter. Attrition rate stood at 12.9 per cent versus 12.7 per cent quarter on quarter.
For the full year, Infosys however maintained its margin guidance. It expects EBIT margins for the fiscal to be between 20 per cent and 22 per cent.
Revenue from operations increased 5 per cent year on year to Rs 40,986 crore.
“We had strong growth of 3.1 per cent quarter-on-quarter in constant currency in Q2. The growth was broad based with good momentum in financial services. This stems from our strength in industry expertise, market leading capabilities in cloud with Cobalt and generative AI with Topaz, resulting in growing client preference to partner with us,” said Salil Parekh, CEO and MD. “Our large deals at USD 2.4 billion in Q2 reflect our differentiated position.” Revenue in US dollar terms stood at USD 4.894 billion, registering a growth of 3.8 per cent from the June quarter.
Earnings Before Interest and Tax (EBIT) stood at Rs 8,649 crore, up 4.4 per cent sequentially. EBIT margin for the quarter remained flat at 21.1 per cent.
Shares of Infosys ended 2.8 per cent higher on Thursday at Rs 1,974.55, ahead of the results announcement.
Growth in earnings was led by manufacturing, energy and financial services. Growth was projected to be driven by the ramp-up of large deals, increasing traction in generative AI deals, and cost optimisations.
The large deals’ TCV (total contract value) was at USD 2.4 billion.
“We continue to focus on accelerating revenue growth with a sharp focus on margin performance. Operating margins for the quarter was at 21.1 per cent, driven by continued benefits from value-based pricing and utilization despite higher employee payouts. Our focus on cash generation resulted in another quarter of over 100 per cent free cash flow conversion to net profits,” said Jayesh Sanghrajka, CFO.
Infosys declared an interim dividend of Rs 21 per share, and fixed October 29 as the record date and November 8 as the payout date. In the previous fiscal, the company had paid a total dividend of Rs 46 per share.
