Top Mutual Funds
- 19 Jul 2024
- ICICI Securities
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STRONG QUARTER WITH BROAD BASED GROWTH AND LARGE DEAL WINS; GUIDANCE REVISED UPWARDS
INFY - 1420 Change: 6.40 (0.45 %)News: Infosys reported strong performance in Q1FY25 as revenue increased by 3.6% QoQ/2.5% YoY in CC terms. The company reported revenue of US$ 4,714 mn, up 3.3% QoQ/2.1& YoY while in rupee terms revenue came at ₹39,315 crore, up 3.7% QoQ/3.6% YoY. Geography wise in CC terms, North America (58.9% of mix) declined by 1.2% YoY while Europe (28.4% of mix), India (3.1% of mix) & ROW (9.6% of mix) grew by 9.1%, 19.9% & 2.3% YoY. Vertical wise on a QoQ basis in US$ terms Others (3.3% of mix), Financial Services (27.5% of mix), Manufacturing (14.7 of mix), Lifesciences (7.3% of mix), ER&U (13.3% of mix) and Communication (12.1% of mix) which grew by 17.5%, 7.6%, 3%, 3%, while Hi-Tech (8% of mix) and Retail (13.8% of mix) de-grew by 5% & 0.3% respectively. EBIT margin of the company increased by 100 bps QoQ to 21.1% due to tailwinds of 100 bps from the absence of one-off items of the previous quarter , 80 bps benefit from Project Maximus (largely from higher utilisation & value based selling) and a 40 bsp benefit from improved realisations which were partly offset by headwinds of 120 bps from higher variable pay & leave cost offset by currency and others. Large deal TCV came at US$4.1 bn (57.6% net new).
Views: The company expects H1 to be better than H2 and for FY25 revised its revenue growth guidance to 3-4% in CC terms (vs 1-3% guided previously) and maintained its margin guidance in the band of 20-22%. Guidance upgrade is on the back of a broad-based growth coupled with improvements in US financial services, strong large deal closures (34 in this quarter) The company expressed that though there are early signs of improvement in the vertical performances, especially in financial services. The clients, however, still continue to remain cautious resulting in little to no recovery in discretionary spend.
Impact: Positive