IT giant Infosys on Thursday reported its financial results for the second quarter of the fiscal year 2024. The company recorded a 3.2 per cent increase in its net profit year-over-year (YoY), reaching a total of Rs 6,212 crore. In Q2 FY23, its net profit stood at Rs 6,021 crore.
In addition to the increase in net profit, Infosys also saw its revenue for the July-September 2023 period grow by 6.7 per cent. The revenue totaled Rs 38,994 crore during this quarter, compared to Rs 36,538 crore in the corresponding period the previous year.
Infosys also declared an interim dividend of Rs 18 per equity share. The record date for this dividend has been set for 25 October 2023, with the payout date scheduled for 6 November 2023.
“We had our highest large deals value at USD 7.7 billion in Q2 spread across all verticals and geographies. This, in an uncertain macro-environment, is a testament to our ability to pivot and stay relevant to the evolving client needs, by delivering the benefits of transformation as well as productivity and cost savings at scale.” - Salil Parekh, CEO and MD at Infosys.
The reported net profit of Rs 6,212 crore not only exceeded market expectations but also underscored Infosys's continued financial resilience. Similarly, the revenue figure of Rs 38,994 crore surpassed market expectations, which were estimated at around Rs 38,350 crore by analysts.
“Strong H1 performance with significant large deal wins, builds a solid foundation for the future. The growing adoption of our Generative AI offering, Topaz, is helping us deliver consistent value and expand market share,” Parekh added.
Revised Guidance
In a surprising move, Infosys adjusted its guidance for the fiscal year. The company now anticipates revenue growth in the range of 1.0 per cent to 2.5 per cent in constant currency terms, narrowing the previous guidance range of 1.0 per cent to 3.5 per cent.
Discussing revised guidance during the Q2 FY24 results press conference, Parekh explained that discretionary programs and transformation projects have notably decreased. Decision-making processes remain sluggish, resulting in constrained volumes for the current quarter.
While large and mega deal wins are positioning Infosys favourably for the future, the ramp-ups, mainly expected towards the latter part of the year, may see delays.
Operating margin guidance was retained at 20 per cent to 22 per cent.
Similar to Tata Consultancy Services, Infosys also experienced a further reduction in attrition. The attrition rate over the past 12 months decreased to 14.6 per cent from 17.3 per cent in the previous quarter.
The net staff headcount decreased by 7,530 during the September quarter, totaling 3,28,764.
Employee utilisation showed improvement, reaching 80.4 per cent in the September quarter, up from 78.9 per cent in the June quarter. Infosys CFO noted during the Q2 FY24 press conference that the company will be working on utilisation improvement going ahead. “As we continue to grow, we can actually tighten utilisation,” he said.
Sectoral Developments
In terms of specific industry sectors, the financial services segment, which contributes significantly to Infosys’ overall revenue, saw a decline of 7.3 per cent YoY in constant currency terms. Meanwhile, the communications sector reported a 4.3 per cent decline in constant currency revenue.
On the positive side, the retail, manufacturing and lifesciences verticals all experienced robust growth, ranging from nine per cent to 18.4 per cent in constant currency revenue.
From a regional perspective, North America saw modest one per cent growth in the quarter, while Europe demonstrated strong growth at 5.4 per cent.
“Infosys Q2 earnings are in line with markets expectation but the company trimming its revenue guidance would be negative for the stock." - Prashanth Tapse, Senior VP (Research), Mehta Equities
Also Read: Infosys Q2 FY24: Records Highest-Ever Large And Mega Deal Wins With TCV Of $7.7 Bn