Infosys Q3 Results: Net profit jumps 11.4% to ₹6,806 crore; FY25 guidance revised upward

Infosys Ltd, the second-largest IT exporter in India, reported a robust 11.4% year-on-year (YoY) increase in net profit for the December quarter (Q3 FY25), reaching ₹6,806 crore compared to ₹6,106 crore in the same period last year. Revenue grew 7.6% YoY to ₹41,764 crore, up from ₹38,821 crore in the corresponding quarter of the previous year.

The company also revised its FY25 revenue growth guidance to 4.5-5% in constant currency (CC) terms, an increase from the earlier projection of 3.75-4.5%. Operating margins remained steady within the 20-22% guidance range, with Q3 margins reported at 21.3%, an 80-basis-point improvement from the same period last year.

Key Highlights of Q3 FY25 Performance

Revenue Growth:

Infosys posted sequential revenue growth of 1.7% in CC terms, exceeding market expectations. Dollar revenue for the quarter stood at $4.94 billion, while free cash flow reached a record $1,263 million, growing 90% YoY.

Deal Wins:

The total contract value (TCV) of large deal wins was $2.5 billion, with 63% representing new business. This marks a sequential growth of 57%.

Growth Drivers:

The manufacturing sector led the charge with 10% YoY growth, followed by Energy, Utilities, Resources & Services (8.6%), Hi-Tech (8.5%), and Life Sciences (6.5%). Geographically, India witnessed stellar growth of 38.3% YoY, while Europe and North America reported a solid 11.9% growth each.

Client Metrics:

Infosys' active client base increased slightly to 1,876 in Q3, up from 1,870 in the previous quarter. Notably, clients contributing over $50 million rose to 89, while those contributing over $10 million fell to 301.

Employee Metrics:

Total headcount rose to 3,23,379, marking an increase from 3,17,788 in the previous quarter. Voluntary attrition edged higher to 13.7% compared to 12.9% in the previous quarter.

Management Commentary

CEO and MD Salil Parekh highlighted the strong sequential revenue growth during a seasonally weak quarter, attributing it to differentiated digital offerings and a focus on enterprise AI, particularly generative AI. Parekh expressed confidence in the company’s improved deal pipeline and growth momentum.

CFO Jayesh Sanghrajka emphasized the focus on operating margin expansion and cash flow management, noting a free cash conversion of 157% of net profit for the quarter and cumulative free cash generation surpassing FY24 levels.

Market Reaction and Analyst Insights

Emkay Global noted that Infosys' revenue exceeded its expectations, while margins aligned with market predictions. The firm expects a positive stock market reaction. Analysts highlighted comprehensive growth across business segments, robust recovery in the BFSI sector, and improved margins as key drivers.

Sagar Shetty of StoxBox commended Infosys for surpassing Street estimates, revising its guidance upward, and demonstrating resilience in discretionary spending and deal conversions.

Infosys shares closed at ₹1,920.05 on the NSE, down 1.52% on Thursday.

Disclaimer:

This news article is for informational purposes only and should not be construed as financial advice. Investors are encouraged to consult a qualified financial advisor before making investment decisions.