Infosys Ltd Q2 FY25 net profit increased 2.2 percent quarter-on-quarter to Rs 6,506 crore from Rs 6,368 crore, missing Street expectations. The Indian IT bellwether's July-September revenue also posted a healthy growth of 4.2 percent on-quarter, reaching Rs 40,986 crore.
The company raised its full-year revenue growth guidance to 3.75-4.5 percent, topping up on the surprise hike to 3-4 percent announced in July. Analysts from brokerages such as PhillipCapital, Emkay Global, and Nuvama had anticipated the IT major would raise its full-year revenue growth guidance.
A Moneycontrol poll of 11 brokerages had estimated Infosys' fiscal second-quarter net profit to rise to Rs 6,769 crore, and revenue to increase to Rs 40,857 crore. Growth was projected to be driven by the ramp-up of large deals, increasing traction in Generative AI deals, and cost optimisations.
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. Previously, for FY24, the company had declared a final dividend of Rs 20, a special dividend of Rs 8, and an interim dividend of Rs 18.
The IT major reported its fiscal second quarter operating margin at 21.1 percent. The large deals’ TCV (total contract value) was at $2.4 billion.
The EBIT (earnings before interest and tax) margin or the operating margin for the Bengaluru-based company was flat at 21.1 percent. Infosys' margin performance was expected to be driven by cost optimisation efforts, lower onsite costs, improved utilisation rates, and better operational efficiencies.
The company retained its operating margin guidance of 20-22 percent.
Salil Parekh, CEO and MD, said the company had strong growth of 3.1 percent quarter-on-quarter in constant current 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”, Parekh said.
He further said the company's large deals at $2.4 billion in Q2 reflects its differentiated position. "I am grateful to our employees for their unwavering commitment to our client as we further strengthen our market leadership."
In constant currency terms, the topline grew by 3.3 percent YoY.
Other Parameters
In geography-wise performance, contribution from the North American region declined by 2.6 percent YoY in reported terms and accounted for 57.4 percent of the total revenue share. This was followed by over 15 percent growth from the European region, accounting for about 30 percent of the total revenue share.
Chief Financial Officer Jayesh Sanghrajka said in a statement that the company will continue to focus on accelerating revenue growth with a sharp focus on margin performance. He added that margins for the quarter were driven by continued benefits from value-based pricing and utilisation despite higher employee payouts.
"Our focus on cash generation resulted in another quarter of over 100% Free Cash Flow conversion to net profits” said Sanghrajka.
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