Infy Raises Revenue Guidance For 2 Qtrs In A Row

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. But we don’t see change in the discretionary spend environment in other verticals - Salil Parekh, CEO, Infosys

Bengaluru: Infosys on Thursday posted sound second quarter performance with healthy revenue growth and deal pipeline. On the back of improvement in its financial services vertical, the Bengaluru-headquartered company raised its annual revenue guidance to 3.75-4.5 per cent from earlier 3-4 per cent.

In the September quarter, Infosys posted a net profit of Rs 6,506 crore, an increase of 4.7 per cent over the same period last year. Its revenue increased 5.1 per cent YoY to Rs 40,986 crore during this period. In dollar term, revenue was at $4.89 billion, which was an increase of 3.1 per cent sequentially in constant currency term. Its operating margin was at 21.1 per cent, 10 basis points lower than the past quarter. The company bagged large deals worth $2.4 billion during the September quarter.

“We had strong growth of 3.1 per cent quarter-on-quarter in constant current in Q2. The growth was broad based with good momentum in financial services. We see a lot of traction in our financial services segment with discretionary spend coming back. But we don’t see change in the discretionary spend environment in other verticals,” Salil Parekh, CEO of Infosys said during the post results press conference.

“We revised our guidance based on the improvement in the US demand and robust deal pipeline,” Parekh added. While the company revised its revenue growth guidance upwards to 3.75-4.5 per cent in constant currency term, it maintained its operating margin guidance of 20-22 per cent for FY25.

“We may see some headwinds in terms of margin growth as we plan to give salary hikes during the fourth quarter (January onwards). However, we have other levers to maintain our margin at the guided range,” Jayesh Sanghrajka, CFO of Infosys said.

Among geographies, while North America saw a degrowth of 2.7 per cent YoY, while Europe grew 15.5 per cent during this period. However, North America saw growth in sequential term.

The company reported a 2.3 per cent growth in its financial services vertical, manufacturing saw a growth of 12.3 per cent during second quarter.

After consecutive quarters of decline, the company reported increase its overall headcount in the second quarter.

Its total headcount grew 2,456 to 317,788 by the end of second quarter. “We plan to hire around 15,000 to 20,000 freshers in the current financial year. We don’t provide quarter specific onboarding of freshers, but these many freshers will be hired this fiscal year,” Sanghrajka said.

The company will roll out salary hikes during the fourth quarter from January onwards. However, the company management didn’t quantify the quantum of hikes that would be given to the employees.