Infosys is set to reveal its Q1FY25 results after a board meeting scheduled on July 18. As investors and analysts keenly await this announcement, the anticipation stems from the broader context of the uncertain outlook for India’s IT sector in FY25.
On June 14, Infosys officially announced that its Board of Directors would meet on July 17 and 18 to consider and approve the company’s financial results for the April-June quarter. In a regulatory filing to the stock exchanges, Infosys stated that the board would review and take on record the audited consolidated and standalone financial results as per Indian Accounting Standards (INDAS) and the International Financial Reporting Standards (IFRS).
Infosys reported a notable 30% rise in net profit, reaching ₹7,975 crore in the January-March quarter of FY24, compared to ₹6,134 crore in the same period the previous year. Additionally, revenue for the quarter was ₹37,923 crore, marking a 1.3% year-on-year increase. However, in constant currency terms, revenues remained flat YoY and declined by 2.2% sequentially, reflecting some underlying challenges.
Looking ahead, Infosys has projected a revenue growth of 1-3% in constant currency for FY25, coupled with an operating margin forecast of 20-22%. This cautious guidance contrasts with the previous year’s outlook of 4-7% growth. Salil Parekh (Infosys’ CEO) expressed a slightly improved outlook for financial services in the coming year compared to the past year, hinting at sector-specific optimism.
The broader IT sector in India has been grappling with a challenging environment. According to domestic brokerage firm Prabhudas Lilladher, Tier-1 companies are expected to report below mid-single-digit growth on average for FY25, while Tier-2 companies aim for high-single-digit growth. This conservative stance reflects anticipated delays in project execution and closure activities. However, if there is a recovery in spending aligned with macroeconomic improvements, these estimates could see upward revisions as the year progresses.
Infosys has been somewhat of an outlier in recent quarters. The company reported a sequential decline of 2.2% in constant currency terms for Q4FY24, compared to a 1% decline in the previous quarter. Despite these challenges, Infosys secured a record $17.7 billion in large deal total contract value for FY24, with 52% being net new deals. These substantial deal wins suggest potential growth drivers are in place, awaiting ramp-up.
Moreover, Infosys’ employee dynamics have seen significant changes. The company’s headcount fell by 7.5% to 3,17,240 at the end of FY24, marking the first annual drop in 23 years. The attrition rate also slightly declined to 12.6% in the March quarter from 12.9% in the December quarter, indicating some stability in workforce retention.
As Infosys prepares to unveil its Q1FY25 results, the broader market will be watching closely. The company’s ability to navigate the current industry challenges, leverage its significant deal wins, and capitalize on sector-specific opportunities will be crucial indicators of its resilience and strategic direction. The IT sector’s overall sentiment remains cautious, and Infosys’ performance will provide deeper insights into market trends and competitive positioning.
In this high-stakes environment, the upcoming financial results will not only reflect Infosys’ current standing but also shape investor and market expectations for the coming quarters. The July 18 announcement will be a critical moment for Infosys, setting the tone for the rest of the fiscal year amidst an evolving and competitive IT landscape.
