Information Systems Q2 Results: Guideline Cut Again Despite Increase in Sales and Profit

Even as the larger Indian IT services industry prepares for a slowdown, Infosys Ltd. has cut its revenue growth projection for fiscal 2024 for a second time.

According to a filing with the market on Thursday, the revenue of the second-largest IT services company in India increased 2.8% over the prior three months to Rs 38,994 crore in the quarter ended in September. This contrasts with the Rs 38,503-crore analyst consensus forecast that Bloomberg tracks.

Infosys Q2 Results: Important Highlights (QoQ)

• Revenue increased by 2.8% to Rs. 38,994 crore from Rs. 37,933 crore (Bloomberg estimate: Rs 38,503 crore).
• EBIT increased by 4.8% to Rs. 8,274 crore from Rs. 7,891 crore (Bloomberg estimate: Rs 8,088 crore).
• EBIT margin was 21.20% as opposed to 20.80% (Bloomberg's expectation was 21%). Net profit increased by 4.5% to Rs. 6,215 crore from Rs. 5,945 crore (Bloomberg estimate: Rs 6,266.50 crore).
• Declared interim dividend of Rs. 18 per share.
• 14.6% versus 17.3% for the attrition rate.

In the July-September quarter, Infosys' sales increased 2.2% sequentially to $4,718 million. In constant currency terms, it increased by 2.3%.

The business has revised its constant currency revenue growth forecast for the fiscal year ending March 31, 2024 to 1-2.5%, down from 1%-3.5% at the end of the preceding quarter. In FY24, it intends to attain operating profitability of 20-22%.

According to Chief Executive Officer Salil Parekh, the IT giant achieved significant transaction wins worth $7.7 billion, its best ever for a quarter, on the back of demand spread across verticals and countries.

In a macroeconomic situation that is uncertain, he said, "This 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." "Strong H1 performance with significant large deal wins lays the groundwork for the future." Topaz's growing usage of Generative AI is assisting us in delivering continuous value and expanding market share."

Infosys is the market leader in India's $250 billion IT services industry, which is expected to stall as businesses in the United States and elsewhere cut down on technology to deal with rising interest rates and inflation. Russia's military campaign in Ukraine has also caused economic anxiety for firms.

Infosys, like its larger counterpart Tata Consultancy Services Ltd., is attempting to fuel development through higher-margin digital services.

On Thursday, Infosys shares lost 1.95% to Rs 1,464.55 per share on the BSE, while the benchmark Sensex fell 0.10% to 66,408.39 points. The quarterly results were released after the market closed.