Infosys hits new high as IT major raises FY25 guidance
Infosys, a prominent player in the IT sector, has reported a higher-than-expected Q1 FY25 earnings performance. The company's sequential revenue growth was 3.6% in constant currency terms for the last quarter, surpassing the market consensus estimate of 2.3%. This growth was primarily fueled by the financial services and manufacturing verticals, marking a significant upturn for Infosys's financial services vertical after six quarters of stagnation.
Infosys raises FY25 revenue growth guidance
In a surprising move, Infosys has revised its FY25 constant currency revenue growth guidance to 3-4% year-on-year, up from the previous 1-3%. This upgrade was influenced by the acquisition of German company In-tech and a one-time revenue boost in its India business. The new guidance suggests a compound quarterly growth rate of 0.9-1.6% over the next three quarters.
Infosys shares reach new 52-week high following Q1 results
Following the announcement of its Q1 results, Infosys's shares reached a new 52-week high of ₹1,844 on the NSE. Additionally, Infosys's ADR rose by 8.4% on Friday. In comparison, Wipro Ltd's ADR also saw an increase of 2.8%. The positive market response reflects the company's strong performance and revised growth guidance for FY25. Today, the stock closed nearly 2% up at ₹1,793. In comprison, Nifty and Sensex tanked almost 1%.
Infosys reports significant increase in large deal contracts
Infosys's total contract value for large deals stood at $4.1 billion in Q1 FY25, marking a 79% year-on-year increase. The net new deal component accounted for approximately 58% of this figure. During the quarter, the company signed 34 large deals, demonstrating its strong performance and growth trajectory. Despite these impressive figures, some analysts believe that the revised guidance may still appear conservative.
Infosys maintains EBIT margin guidance, increases EPS forecast
Infosys has maintained its earnings before interest and tax (EBIT) margin guidance for FY25 at 20-22%. In Q1, the EBIT margin rose 100 basis points sequentially to 21.1%, aided by lower subcontracting costs and benefits from project 'Maximus.' Analysts at Nomura Financial Advisory and Securities (India) have raised Infosys's FY25-26 earnings per share (EPS) by 2-3% to account for higher revenues and margins.
Infosys CEO attributes Q1 success to multiple factors
Infosys CEO Salil Parekh attributed the strong Q1 performance to increased volumes from the financial sector and favorable outcomes in the US. He also highlighted exceptionally strong large deal wins and the timely closure of the In-tech acquisition as contributing factors. However, Parekh noted that discretionary spending remains low compared to several quarters ago, indicating potential areas for improvement.
Infosys reports decrease in headcount, varied regional performance
Infosys's headcount has decreased for the sixth consecutive quarter by 1,908 in Q1, bringing the total headcount to 3,15,332. In terms of geographical performance, only the India region saw growth of 90 basis points to account for 3.1% of total revenue share. Meanwhile, the North American region declined by 70 basis points to represent 58.9% of total revenue share and Europe's share declined by 20 basis points to stand at 28.4%.
