Infosys Q1 Results Review - Robust Operating Performance; Guides For 3-4% CC Growth For FY25: Centrum

Centrum Broking Report

Infosys Ltd. reported robust performance for the quarter. Overall, the performance was above expectation. It reported revenue of Rs 393.1 billion (up 3.7% QoQ in Indian rupee terms, up 3.3% QoQ in USD terms). It grew by 3.6% YoY in INR terms(up 2.1% YoY in USD terms).

On YoY basis the growth was led by communication( up 5.4% YoY), manufacturing( up 6% YoY), energy( up 6.3% YoY). While, retail was down 3% YoY. Ebit margin increased by 99 bps QoQ to 21.1%, led by positive operating leverage.

Announced large deal total contract value of $4.1 billion versus $4.5 billion in Q4 FY24. Headcount was down 1,908 employees QoQ to 315,332 employees. LTM Attrition was up 10 bps QoQ to 12.7%. Utilisation excluding trainees increased by 180 bps QoQ to 85.3%. No of active clients was down 15 QoQ to 1867. Days sales outstanding increased by 1 day QoQ to 72 days. It has Increased its guidance to 3-4% revenue growth in FY25 in cc terms with Ebit margin band of 20- 22%. It is seeing signs of improvement in the U.S.

BFSI space especially in segments such as mortgages, card payments etc. We expect revenue/Ebitda/PAT to grow at 10.5%/13.2%/10.7% over FY24-FY26E. We have revised up our FY25E/FY26E EPS by 1.2%/3.5%.

We maintain Add rating on the stock with revised target price of Rs 1,864 (versus Rs 1,577 earlier) at PE of 24 times on FY26E.

We have increased target PE multiple from 21 times to 24 times to account for increased guidance for FY25E and certain green shoots in demand environment.

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