Infosys raises FY25 revenue forecast on BFSI boost; Q2 net profit up 4.7%

Ups growth projection to 3.75-4.5%

Infosys, India’s second-largest software exporter, raised its sales forecast for the financial year 2024-25 (FY25) to 3.75-4.5 per cent as it beat second-quarter revenue estimates on Thursday amid signs of a revival in demand from key verticals.

This is the second upward revision in the annual revenue forecast in FY25, with the firm earlier projecting 3-4 per cent growth.

The company reported a 4.7 per cent year-on-year (Y-o-Y) increase in net profit at Rs 6,506 crore for Q2FY25, missing the estimates. Net profit was up 2.2 per cent compared to the previous quarter. Revenue for the quarter grew to Rs 40,986 crore, up 5.1 per cent Y-o-Y and 4.2 per cent sequentially.

 

Bloomberg had estimated Infosys’ revenue to be at Rs 40,820.2 crore, and profit at Rs 6,831.4 crore. 

The Infosys board announced an interim dividend of Rs 21 per share, a 16.7 per cent increase from last year. The company also said it is on track to onboard 15,000-20,000 freshers in the current financial year.

The latest upgrade in Infosys’ growth forecast came on the back of improving discretionary spend by its largest vertical -- banking and financial services -- and the Q2 pipeline.

Salil Parekh, chief executive officer and managing director, Infosys, said banking and financial services in the US continue to see an increase in discretionary spend, especially in the capital and mortgages market, and the credit and payments segment.

The Bengaluru-headquartered firm’s results conference opened with a tribute to Tata Sons chairman emeritus Ratan Tata, who passed away last week.

“We had a strong performance in Q2, with robust and broad-based growth and stable operating margins, strong large deals and increased employee headcount,” Parekh said.

He said that while the banking, financial services and insurance (BFSI) vertical grew in Q2, the automotive sector in Europe was slow. Apart from the BFSI segment, they do not see other industries yet starting to change their discretionary spends, he added.

This was evident in the firm’s geographic and vertical growth. Revenue contribution from North America, the largest geography for the company, was down 2.6 per cent. Europe, however, grew 16.7 per cent, and the rest of the world was up 4.8 per cent Y-o-Y.

In terms of verticals, BFSI was up 2.8 per cent, manufacturing 13.5 per cent, and energy and utilities 10.7 per cent Y-o-Y, while retail was down 9.2 per cent.

The total contract value (TCV) was softer than the previous quarter. The company reported a TCV of $2.4 billion in Q2, significantly lower than Q1’s $4.1 billion.

The company also announced that salary hikes will be in January and be effective from April. “We are planning a wage hike in Q4, which will be in a phased manner. Some of it will be effective in January and the rest in April,” said Jayesh Sanghrajka, chief financial officer.

On GenAI, the company is focused on three specific areas: It is building an enterprise-wide generative AI platform. It is also creating small language models that can be rolled out across industries. It is launching multi-agent solutions that are beyond being an assistant. “We see a huge opportunity and a very deep approach that we have built for GenAI,” added Parekh.