Today, Infosys released its first-quarter results: India’s IT behemoth Infosys, which will report its first-quarter results on July 18, 2024, is expected to achieve solid sequential revenue growth in the first quarter ending June 2024, owing to a surge in large agreements.
According to brokerages, the second-largest IT services provider is expected to record greater constant currency sales growth than its peers TCS and HCLTech.
Infosys and other IT sector companies’ financial performance is expected to be low. The consensus is that the Information Technology services industry would develop moderately in the first quarter of FY25, owing to reduced discretionary spending caused by macroeconomic uncertainty. Additionally, the forthcoming US elections have an impact on the near-term forecast.
PAT and revenue increase
According to brokerage predictions, the IT major would report a consolidated net profit of 3-6% for the June quarter of 2024.
According to Kotak Institutional Equities, revenue is expected to climb by 2.5 percent, owing to the ramp-up of many big projects. The March 2024 quarter saw a one-time 100 basis point revenue impact due to the rescoping of an engagement with a financial services client, resulting in a low base and essentially adding a 1% lift to the growth figures for the June 2024 quarter.
In the March quarter, Infosys’ consolidated net profit increased by 30% year on year to ₹7,969 crore. Revenue for the same time was ₹37,923 crore, representing a 1% year-on-year increase.
EBIT margins and guidance
The brokerage company also expects an 80 basis point quarterly gain in EBIT margin due to the lack of a previous 100 basis point one-time impact. However, it expects the normalization of ECL and post-sale client support reserves to create a 50 basis point headwind. This will be mitigated by a net benefit accrual of 50 basis points, lower visa and subcontractor fees, and a higher staff utilization rate.
According to Kotak analysts, Infosys’ revenue growth projection for FY2025 will remain between 1-3 percent. Infosys is also projected to gain significant deal wins with a Total Contract Value (TCV) greater than $3 billion.
