Infosys Q2 Results: Guidance Trimmed Again Even As Revenue, Profit Rise

Infosys Ltd. has lowered its revenue growth guidance for fiscal 2024 for a second straight time as the Indian IT services industry braces for a slowdown.

Revenue of India’s second largest IT services firm rose 2.8% over the previous three months to Rs 38,994 crore in the quarter ended September, according to an exchange filing on Thursday. That compares with the Rs 38,503-crore consensus estimate of analysts tracked by Bloomberg.

Infosys Q2 Results: Key Highlights (QoQ)

• Revenue up 2.8% at Rs 38,994 crore vs Rs 37,933 crore (Bloomberg estimate: Rs 38,503 crore).

• EBIT up 4.8% at Rs 8,274 crore vs Rs 7,891 crore (Bloomberg estimate: Rs 8,088 crore).

• EBIT margin at 21.20% vs 20.80% (Bloomberg estimate: 21%).

• Net profit up 4.5% at Rs 6,215 crore vs Rs 5,945 crore (Bloomberg estimate: Rs 6,266.50 crore).

• Interim dividend of Rs 18 per share declared.

• Attrition rate at 14.6% vs 17.3%.

In dollar terms, Infosys’ revenue rose 2.2% sequentially to $4,718 million in the July-September quarter. It was up 2.3% in constant currency terms.

The company has now pegged its constant currency revenue growth at 1-2.5% for the fiscal ending March 31, 2024, as against 1%-3.5% estimated at the end of the previous quarter. It aims to achieve an operational profitability of 20-22% in FY24.

The IT bellwether clocked large deal wins worth $7.7 billion—its highest ever for a quarter—on the back of demand spread across verticals and geographies, Chief Executive Officer Salil Parekh said in a statement.

“This, in an uncertain macro environment, is a testament to our ability to pivot and stay relevant to evolving client needs, by delivering the benefits of transformation as well as productivity and cost savings at scale,” he said. “Strong H1 performance, with significant large deal wins, builds a solid foundation for the future. Growing adoption of our Generative AI offering, Topaz, is helping us deliver consistent value and expand market share.”

Infosys leads India’s $250-billion IT services industry, which is bracing for a slowdown as enterprises in the U.S. and beyond cut back on technology to cope with high interest rates and inflation. Russia’s war on Ukraine has also created economic uncertainty for businesses.

Like larger peer Tata Consultancy Services Ltd., Infosys is also trying to fuel growth through higher-margin digital services.

On Thursday, Infosys shares fell 1.95% to Rs 1,464.55 apiece on the BSE even as the benchmark Sensex ended the day 0.10% lower at 66,408.39 points. The quarterly results were declared after market hours.