Infosys Q3FY25 Results: Profit Rises 11.6%

Stocks in News: Infosys, India’s second largest IT player, released its Q3FY25 results post-market hours on January 16, 2025, delivering impressive numbers that surpassed market expectations. Let’s break it down.

Infosys Key Profit and Revenue Metrics

Net Profit: Infosys reported an 11.6% year-on-year (YoY) increase in net profit, reaching Rs 6,822 crore, up from Rs 6,113 crore in the same period last year. Sequentially, the profit rose by 4.7%.
Revenue: The firm’s revenue rose by 7.6% YoY, amounting to Rs 41,764 crore, compared to Rs 38,821 crore in Q3FY24. Sequentially, revenue growth stood at 1.9%.
Operating Margins: The EBIT margin improved by 10 basis points (bps) to 21.3%.

Revenue Guidance Raised for FY25

For the third consecutive quarter, Infosys raised its constant currency (CC) revenue growth guidance to 4.5-5%, up from the earlier 3.75-4.5%. This marks the eighth upward revision in the past nine quarters.

Additionally, the IT major maintained its operating margin guidance at 20-22% for FY25.

Sectoral Growth Insights

Infosys’ broad-based growth was driven by notable performances across sectors:

Manufacturing: 10.7% YoY CC growth
Energy & Utilities: 8.6% CC growth
Hi-tech: 8.4% CC growth
Financial Services: 6.1% YoY CC revenue growth
Communications: 4% CC growth
Retail: Revenues remained flattish

Infosys Order Book and Large Deal Wins

Infosys secured large deal wins with a total contract value (TCV) of $2.5 billion, marking a 57% sequential growth. Importantly, 63% of these deals are net new.

Management Commentary & Outlook

Salil Parekh, CEO and MD, highlighted the company's strong sequential revenue growth in a seasonally weak quarter, coupled with year-on-year growth and robust margins. He attributed this to the success of differentiated digital offerings, strategic initiatives, and a strengthened focus on enterprise AI, particularly generative AI, which is gaining significant client traction.

Jayesh Sanghrajka, CFO, noted the company's strong performance with revenue growth across segments and operating margin expansion. He emphasized the benefits of improved realization, scale efficiencies, and a structured approach to margin expansion. Free cash flow conversion to net profits reached 157% in Q3, with cash generation for the first nine months of FY25 exceeding that of the entire FY24.

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