Infosys Shares Tumbled Over 3%: Check Why?

The leading IT giant, Infosys has released its results for the quarter ended September 30, 2024 (Q2 FY25), wherein, it reported a net profit of ₹6,506 crore for Q2 FY25, a quarter-on-quarter increase of 2.2% from ₹6,368 crore, though this fell short of analysts’ expectations. Revenue for the July-September period grew 4.2% quarter-on-quarter, reaching ₹40,986 crore.

The company raised its full-year revenue growth guidance to 3.75-4.5%, building on the unexpected increase to 3-4% announced in July. Analysts from firms like PhillipCapital, Emkay Global, and Nuvama had anticipated this upward revision.

Infosys declared an interim dividend of ₹21 per share, with October 29 set as the record date and November 8 as the payout date. In FY24, the company had issued a final dividend of ₹20, a special dividend of ₹8, and an interim dividend of ₹18.

The operating margin for the second quarter was reported at 21.1%, with total contract value (TCV) from large deals amounting to $2.4 billion. The earnings before interest and tax (EBIT) margin remained stable at 21.1%, supported by cost optimization initiatives, lower onsite costs, improved utilization rates, and enhanced operational efficiencies. The company maintained its operating margin guidance of 20-22%.

In constant currency terms, the topline grew by 3.3% year-on-year. Regionally, revenue from North America declined by 2.6% year-on-year, representing 57.4% of total revenue. In contrast, the European region saw over 15% growth, contributing approximately 30% to total revenue.

“We had strong growth of 3.1% 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”, said Salil Parekh, CEO and MD. “Our large deals at $2.4 billion in Q2 reflect our differentiated position. I am grateful to our employees for their unwavering commitment to our client as we further strengthen our market leadership.” 

“We continue to focus on accelerating revenue growth with a sharp focus on margin performance. Operating margins for the quarter were at 21.1%, 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% Free Cash Flow conversion to net profits” said Jayesh Sanghrajka, CFO.”

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