Infosys Q2 results: Net profit rises 4.7% to Rs 6,506 cr, revenue up 5%

Infosys, India’s second-largest software exporter by revenue, raised its revenue guidance for the financial year 2024-25 (FY25) to 3.75-4.5 per cent, up from the 3-4 per cent guided in Q1 FY25.

With Infosys revising its revenue guidance upwards, it signals better spending from clients. This is the second upward guidance from the company in this financial year. Compared to the other two large-cap players—Tata Consultancy Services (TCS) and HCLTech—Infosys appears to have a better performance metric.

The company reported a 4.7 per cent year-on-year (Y-o-Y) increase in its net profit at Rs 6,506 crore for the second quarter of 2024-25 (FY25), below the consensus Bloomberg estimates of around Rs 6,831.4 crore. Sequentially, net profits were up 2.2 per cent.

Revenue for the quarter came in at Rs 40,986 crore, up 5.1 per cent Y-o-Y, above the consensus Bloomberg estimate of around Rs 40,820.2 crore. Sequentially, revenue was up 4.2 per cent.

The company maintained its operating margin guidance of 20-22 per cent for FY25.

“We had strong growth of 3.1% quarter-on-quarter in constant currency in Q2. The growth was broad-based with good momentum in financial services. This stems from our strength in industry expertise, market-leading capabilities in cloud with Cobalt and generative AI with Topaz, resulting in growing client preference to partner with us,” said Salil Parekh, CEO and MD.

“Our large deals at $2.4 billion in Q2 reflect our differentiated position. I am grateful to our employees for their unwavering commitment to our clients as we further strengthen our market leadership,” he added.

However, the total contract value (TCV) for the quarter was softer than in previous quarters. The company had a TCV of $2.4 billion, lower than Q1 FY25’s TCV of $4.1 billion.

The margin for the quarter came in at 21.1 per cent, a decline of 0.1 per cent Y-o-Y and flat sequentially.

“We continue to focus on accelerating revenue growth with a sharp focus on margin performance. Operating margins for the quarter were at 21.1 per cent, driven by continued benefits from value-based pricing and utilisation, despite higher employee payouts. Our focus on cash generation resulted in another quarter of over 100% free cash flow conversion to net profits,” said Jayesh Sanghrajka, CFO.

The board announced an interim dividend of Rs 21 per share, a 16.7 per cent increase from last year.