Infosys Q1 Results Review - One-Offs Boost Guidance, But Demand Improving: Motilal Oswal

Motilal Oswal Report

Infosys Ltd. reported Q1 FY25 revenues of $4,714 billion, growth of 3.6% QoQ/2.5% YoY constant currency versus our estimate of ~2% QoQ CC. Ebit margins stood at 21.1% versus our estimates of 20.4%. Ebit grew 9% QoQ/5.5% YoY to Rs 83 billion (estimate Rs 79 billion). Profit after tax came in at Rs 64 billion, up 4.8% QoQ/7.1% YoY, in line with our estimate of Rs 64 billion.

Deal wins were strong at $4.1 billion (flat QoQ). Infosys upgraded its FY25 revenue growth guidance to 3-4% YoY in CC (1-3% earlier). The growth outperformance during the quarter was driven by ~45% QoQ growth in India business, which was a one-off event.

The guidance upgrade was largely driven by the acquisition of In-tech (~0.8% revenue contribution for FY25E) and the push from the one-off revenue spike in its India business.

However, commentary on growth recovery in North America and financial services was encouraging. Pressure on discretionary spending persists, but we believe the cycle is turning and clients are finally considering re-investing their savings from cost-reduction programs to reduce their technological debt.

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