Infosys Q1 Results Review - Near Term Positives Likely In The Price: Systematix

Systematix Research Report

Infosys Ltd. posted strong numbers in Q1 FY25. Even after adjusting for one-off benefit of 50 basis points in constant currency for one of its contracts in India, the company reported strong 3.1% growth in CC.

For FY25, management increased revenue guidance from 1-3% growth in CC to 3-4%, which factors in-

1. the strong Q1 performance,

2. visible green shoots in the U.S. banking, financial services and insurance market,

3. order book execution of previously won orders,

4. consolidation of In-Tech acquisition from Q2 onwards.

The company mentioned that the BFSI vertical in the U.S. market is witnessing recovery, especially in some sub-segments such as mortgage, capital market, card payments and infra, which otherwise faced stress a few quarters ago.

However, the company stated that discretionary spending continues to remain under pressure. It also indicated that tech spending in few sectors like communications, retail and Hi-tech remains soft and clients are probably waiting for the macro environment to improve before indulging in any meaningful tech spending in these areas.

Though margins improved in Q1 (adjusted for one-off, margins were up 60 bps QoQ versus reported increase of 100bps QoQ), management retained its margin guidance despite the sharp uptick in revenues, which came as a disappointment.

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