Infosys’ Q1 results beat estimates with a 3.6% revenue rise and a 7.1% profit increase, prompting a revenue forecast raise for FY 2025.
Bollywood Fever: Infosys reported impressive quarterly results on Thursday, exceeding expectations with a notable recovery in demand from its key financial services sector. India’s second-largest IT services firm has subsequently raised its revenue forecast for the financial year.
U.S.-listed shares of the Bengaluru-based company surged by 5% following the announcement. Infosys joins industry leader Tata Consultancy Services and smaller competitor HCLTech in reporting a strong quarter, offering a positive outlook for the $254 billion IT sector, which has faced slow demand after a pandemic-induced boom.
“There is a recovery at play after five to six quarters of depressed spending,” Investec analyst Nitin Padmanabhan told Reuters.
Infosys now anticipates revenue growth of 3%-4% for the fiscal year 2025, an increase from the previous forecast of 1%-3%.
In the first quarter, consolidated revenue rose by 3.6% to 393.15 billion rupees ($4.70 billion), surpassing analysts’ average estimate of 389.15 billion rupees, according to LSEG data. The company’s banking and financial services division saw a 0.3% revenue increase after experiencing declines for four consecutive quarters.
IT clients had reduced spending on non-essential projects in recent quarters due to economic uncertainty and higher interest rates. However, analysts predict this trend will reverse following potential interest rate cuts by the US Federal Reserve and the resolution of the nation’s election outcomes.
Infosys’ net profit for the quarter ended June rose by 7.1% to 63.68 billion rupees, beating analysts’ average estimate of 62.53 billion rupees, as per LSEG data. The operating margin also improved by 30 basis points year-on-year to 21.1%.
Large order bookings, or contract wins exceeding $100 million, totaled $4.1 billion for the quarter, compared to $4.5 billion in the previous quarter and $2.3 billion a year ago.
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