In Short:
Infosys will report its Q2 FY25 earnings on October 17, with expectations of strong revenue growth between ₹40,584 – 41,230 crore, up from ₹39,315 crore last quarter. EBIT margins are projected at 20.9-21.5%. Analysts anticipate a possible guidance raise due to robust digital capabilities. The company’s workforce declined slightly, with a focus on hiring for tech roles and reskilling efforts.
Infosys is gearing up to release its second-quarter earnings for FY25 on October 17. Having enjoyed a sequential revenue boost in the last quarter, this Indian IT powerhouse is anticipated to maintain its momentum. Analysts are brimming with optimism about a potential guidance increase. Let’s dive into the exciting details!
Revenue Growth
Brokerages have unanimously predicted that Infosys will generate revenue in the ballpark of ₹40,584 to ₹41,230 crore, showcasing robust sequential growth from the previous quarter’s ₹39,315 crore.
The report from Axis Securities suggests that this quarter, Infosys may outshine its large-cap peers with impressive quarter-on-quarter growth. Year-on-year, the revenue growth is expected to hover between 5.5% and 8.7%, demonstrating a marked increase from Q2FY24’s ₹37,933 crore. In terms of constant currency (CC), projections indicate sequential growth of 3.2-4.9%, and q-o-q growth of 2.4-3.0%.
Margins & Guidance
According to brokerage surveys, Infosys is likely to report an EBIT margin between 20.9% and 21.5%. This would indicate steady growth compared to Q1FY25’s operating margin of 21.1%. However, margins could see a slight dip of 20 to 80 basis points due to the impact of one-off reversals and investments in large deals weighing on profits.
As highlighted in a report from Motilal Oswal, “Margins for the sector are expected to remain stable in Q2 since wage hikes have been postponed to the latter half of FY25.”
While some analysts expect Infosys to maintain its growth forecast of 3-4% for FY25E, a report from BNP Paribas anticipates a stellar quarter, potentially leading to an upward revision of guidance.
“We’re confident in Infosys’ robust digital capabilities to leverage discretionary demand recovery. This company presents the greatest earnings upgrade potential in our coverage,” they noted. The projection is that revenue growth guidance may be adjusted by 50 basis points to a range of 3.5-4.5%.
Deals & TCV
In terms of dollar revenue, Infosys is expected to see a 3.0% quarter-on-quarter growth (with 2.4% in CC and 2.1% organically). This positive outlook can be attributed to the ongoing ramp-up of mega deals, overall volume growth, as well as a contribution of 90 basis points from in-tech acquisitions, according to the BNP Paribas report.
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For the quarter ending June, the total contract value (TCV) from large deals hit $4.1 billion, slightly down from $4.5 billion in Q4FY24. However, like many others in the industry, Infosys is set to report robust quarterly TCV wins.
Attrition & Hiring
In Q1, Infosys saw a slight drop in its total workforce by 1,908 employees, leaving it with 3,15,332, down from 3,17,240. Interestingly, voluntary attrition climbed to 12.7% compared to 12.6% in the previous quarter.
“Numerous IT services firms plan to onboard between 25,000 to 50,000 new employees each in FY25, focusing heavily on roles in cloud computing, AI, and cybersecurity. Nearly 70% of future IT hiring will concentrate on digital skills,” said Neeti Sharma, CEO of TeamLease Digital. “This reflects the burgeoning demand for talent in data analytics and automation, as companies ramp up their reskilling initiatives for next-gen technologies.”
