Infosys Q1 Results: Profit Soars 10.9% to Rs 5,945 Crore Amidst Revised FY24 Revenue Guidance

Infosys Q1 Results: Profit Soars 10.9% to Rs 5,945 Crore Amidst Revised FY24 Revenue Guidance

Infosys said its net sales increased 10% YoY to Rs 37,933 crore from Rs 34,470 crore in the same period the previous year.

The second-largest IT company by revenue, Infosys, announced on Thursday that its net profit for the June quarter increased by 10.9% year over year (YoY) to Rs 5,945 crore from Rs 5,360 crore the previous quarter. Analysts projected the bottom line to increase by 14–18% for the quarter.

The company, which has its headquarters in Bengaluru, had a 10% YoY increase in net revenues, from Rs 34,470 crore in the same period last year to Rs 37,933 crore this quarter. Revenue increase met expectations on the stock market.

Operating margin for the quarter was 20.8%, up 80 basis points from the same period last year but down 20 basis points from the March quarter’s operating margin of 21.0%. This matched expert predictions.

The IT company reported $4,617 million in revenue, representing a 1% sequential increase (up 4.2% YoY) in revenues measured in constant current (CC) dollars. Analysts anticipated a sequential gain of 0.5% to 8%.

Significant deal victories totalled $2.3 billion. As opposed to the projected initial range of 4–7%, the IT company has lowered its FY24 CC revenue projection downward to 1-3.5%. It has not changed its Ebit margin forecast range from 20% to 22%. While several brokerages did foresee a slightly lower adjustment in sales projections, a growth target of 1-3.5% significantly underperformed their expectations.

From 20.9% in March to 28.4% in the same quarter last year, attrition fell to 17.3%.

“We had an excellent first quarter with growth of 4.2% and significant agreements totaling $2.3 billion, which helps us lay a solid groundwork for future development. With 80 ongoing customer projects, our generative AI skills are increasing successfully. Our all-encompassing AI solution, Topaz, is getting good feedback from customers. Salil Parekh, CEO and MD, stated, “We see this as revolutionary for clients and increasing our total service portfolio.

With the help of our leadership team, “we have expanded the margin improvement programme with a holistic set of actions for the short, medium, and long-term, working on five key areas”, he continued.

Despite the unpredictable macroeconomic climate, Q1 operating margins held up well, according to CFO Nilanjan Roy, thanks to our ongoing commitment to cost reduction.

According to him, Infosys’ strict operational discipline, which included increased productivity measures and higher utilization, contributed to the quarter’s margins. “The conversion of Free Cash was strong at 96.6% of net earnings. Strong capital allocation strategy execution led to larger investor payments and increased ROE to 32.8%, he continued.

On Thursday, Infosys, a leading digital services and consulting provider, reported its first-quarter results. The company’s profit increased by 10.9% to Rs 5,945 crore. Despite this strong performance, the company has trimmed its revenue guidance for the fiscal year 2024, indicating a cautious stance in a still turbulent business environment.

Infosys recorded a consolidated profit of Rs 5,945 crore for the quarter ending June 2023, marking a 10.9% surge compared to the previous quarter. This surpasses most market predictions, demonstrating Infosys’s ability to maintain impressive growth in challenging market conditions. The company’s profits were buoyed by a surge in digital revenues, which reflected the industry-wide shift towards digital transformation.

The IT major reported a 12.4% YoY revenue growth to Rs 27,896 crore for the quarter under review, up from Rs 24,820 crore in Q1 FY23. Infosys has exceeded expectations this quarter, despite the ongoing COVID-19 pandemic. They have capitalized on the rising demand for digital transformation and cloud services. In constant currency terms, the revenue growth was 14.6%.

While the results were impressive, Infosys reduced its revenue growth guidance for FY24. The IT firm now expects year-on-year revenue growth to be between 12% to 14% in constant currency for the fiscal year ending in March 2024. This is a slight reduction from the previous guidance of 14% to 16%.

The reduction in revenue guidance suggests Infosys is adopting a cautious approach amid global economic uncertainties. Infosys CEO Salil Parekh explained that the forecast revision reflects the volatility in the worldwide supply chain and ongoing geopolitical tensions, which might impact client spending and project commencements. However, he emphasized that Infosys is well-positioned to navigate these challenges, underpinned by its client-centric strategy and focus on digital services.

Infosys’s growth during the first quarter was primarily driven by the accelerated demand for digital and cloud services as businesses worldwide continue to embrace digital transformation in response to the pandemic. Digital revenues accounted for 53.9% of the total revenues for the quarter, signifying a rise from the previous quarters and echoing a market trend where businesses are investing more heavily in digital technologies.

Infosys added 12 new clients in the $100 million+ category during the quarter, pointing to the company’s competitive edge and strong market position. The company’s efforts to enhance digital capabilities, backed by strategic acquisitions and partnerships, have helped it gain and retain high-value clients.

Despite lowering its revenue guidance for FY24, Infosys is optimistic about future growth opportunities. The company is committed to enhancing its digital capabilities, improving operational efficiency, and building long-term client relationships. This strategy aims to make Infosys an industry leader in digital services, focusing on areas like cloud, data, and AI, which are expected to grow robust in the coming years.

Infosys’s Q1 FY24 performance showcases resilience amid global economic uncertainties. Although the trimmed revenue guidance reflects the challenges ahead, Infosys’s robust profit, increased demand for digital and cloud services, and the firm’s strategic emphasis on digital transformation indicate a promising future. As Infosys navigates the evolving business landscape, its strategic actions and financial strength will be crucial in shaping its growth trajectory.