Infosys Reports Strong Q1 FY25 Results, Outperforming Market Expectations
Infosys Ltd, the second-largest IT services company in India, has reported robust financial results for the first quarter of fiscal year 2025, demonstrating significant growth and surpassing market expectations. The company’s net profit for the quarter ended June 30, 2024, rose by 7.1% year-on-year to ₹6,368 crore, surpassing the ₹5,945 crore net profit recorded in the corresponding quarter of the previous year. This performance has been attributed to a surge in revenues and improved operational efficiencies.
Revenue and Margins
Infosys saw its revenue grow by 3.6% year-on-year to ₹39,315 crore from ₹37,933 crore in the year-ago period. The operating margin for the quarter was recorded at 21.1%, reflecting a year-on-year growth of 0.3% and a quarter-on-quarter increase of 1.0%. These metrics underscore the company’s ability to maintain healthy profitability amid a competitive IT services landscape.
“The excellent start to FY25 with strong and broad-based growth, operating margin expansion, robust large deals, and highest ever cash generation is a testimony to our differentiated service offerings, enormous client trust, and relentless execution,” stated Salil Parekh, CEO and MD of Infosys. He highlighted the company’s focus on generative AI for enterprises, leveraging their Topaz and Cobalt capabilities to build strong traction with clients.
Record High Cash Flow and Deal Wins
A noteworthy aspect of Infosys’ performance in Q1 FY25 was its highest-ever free cash flow, reported at $1,094 million, marking a substantial 56.5% year-on-year increase. Additionally, the company achieved a record number of large deal wins at 34, with a total commercial value of $4.1 billion. Importantly, 57.6% of these deals were net new, demonstrating Infosys’ ability to attract new business.
Jayesh Sanghrajka, CFO of Infosys, attributed this success to the company’s comprehensive margin expansion program, Project Maximus, and emphasized the importance of cost optimization. “Our relentless drive on cost optimization through Project Maximus is reflected in the all-around improvement in key operating metrics, leading to 1.0% growth in operating margin in Q1,” he said.
Workforce Dynamics
The company’s total employee count stood at 315,332 as of June 30, 2024, slightly down from the previous quarter but significantly reduced from 336,294 in Q1 FY24. Voluntary attrition was recorded at 12.7%, showing a slight increase from 12.6% in the previous quarter but a considerable decrease from 17.3% in the same quarter last year. Women employees constituted 39.2% of the workforce in Q1 FY25.
Market Performance and Future Outlook
Infosys shares closed at ₹1,759.15 on the BSE, up 1.93% for the day. The share has appreciated by 13.71% in the current year and has posted a 19.58% rise over the past year. For fiscal year 2025, Infosys has given a revenue growth guidance of 3-4% in constant currency, with an expected operating margin in the range of 20%-22%.
Comparison with Competitors
In comparison, Tata Consultancy Services (TCS), India’s largest IT services company, reported an 8.7% year-on-year growth in its net profit at ₹12,040 crore for Q4. TCS’s revenue rose by 5.4% year-on-year to ₹62,613 crore. TCS also declared an interim dividend of ₹10 per equity share of ₹1 each.
With a strong start to the fiscal year and an optimistic outlook, Infosys appears well-positioned to leverage its capabilities in AI and cloud services to drive future growth. For more information about Infosys, visit their official website.
Final Thoughts
Infosys’ strong Q1 performance, characterized by impressive revenue growth, record cash flows, and robust large deals, underscores its resilience and adaptability in a competitive market. Through strategic cost optimization and innovation in AI and cloud services, Infosys is set to maintain its trajectory of growth and profitability in the coming years.
