Infosys Q1: 7.1% Profit Surge and 3.6% Revenue Growth Highlight Strong Performance

Infosys (NS:INFY), India's second-largest IT firm, recently released its financial results for the quarter ending June 2024, showcasing a robust performance across various metrics. Net sales climbed to INR 39,315 crore, a 3.64% increase from INR 37,933 crore in June 2023.

This growth was complemented by a rise in net profit to INR 6,368 crore, up 7.12% from the previous year’s INR 5,945 crore. Additionally, EBITDA saw a 6.75% boost, reaching INR 10,275 crore from INR 9,625 crore in the same period last year. Earnings per share (EPS) also improved, rising to INR 15.38 from INR 14.37.

The financial services segment was a significant contributor, with a notable sequential growth of 7.8%. Despite a dip in third-party service delivery items, the company managed to expand its EBIT margin by 100 basis points quarter-on-quarter, reaching 21.1%. This margin growth was partly driven by an increase in employee utilization, which rose to 83.9% from 82% in the previous quarter. Infosys secured large deal wins worth $4.1 billion, maintaining a strong performance over the past year.

For FY25, Infosys has revised its revenue growth guidance to 3%-4% year-on-year, up from the earlier 1%-3%. This upgrade is partly due to the acquisition of In-Tech, contributing approximately 0.7%-0.8% to the outlook. The company’s organic revenue growth remains steady at around 3%, requiring a quarterly compound growth rate of 0.8%-0.9% to achieve the top-end guidance.

In terms of market performance, Infosys experienced broad-based revenue growth across most verticals, with North America and Europe showing modest quarter-on-quarter increases of 2.1% and 2.3%, respectively. The voluntary attrition rate for IT services stabilized at 12.75% on a last-twelve-months (LTM) basis, indicating improved employee retention.

Infosys shares surged nearly 5% to a new 52-week high of INR 1,843 on the BSE following the announcement of these results. The stock opened at INR 1,842.05, up from its previous close of INR 1,759.15, and continued to trade higher throughout the day. By 9:20 am, it was at INR 1,821 per share, marking a 3.52% increase.

In dollar terms, Infosys reported revenue of $4,714 million for the quarter, up 2.1% year-on-year and 3.3% quarter-on-quarter. The Profit After Tax (PAT) in dollar terms was $763 million, reflecting a 5.5% year-on-year increase but a 20.4% decline from the previous quarter.

Overall, Infosys has demonstrated a strong start to FY25, with promising revenue growth, solid profitability, and significant deal wins, positioning itself well for the future.

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