Infosys's FY25 Guidance a Silver Lining for Indian IT Services Sector Infosys revised its revenue growth guidance upwards to 4.5-5.0 per cent in constant currency from 3.75-4.5 per cent at the end of the second quarter.
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Infosys has raised its FY25 revenue growth guidance for the third straight quarter to 4.5-5.0 per cent in constant currency indicting a positive outlook for the Indian IT services sector which has been seeing slow growth in the past few quarters.
The revenue guidance stood at 3.75-4.5 per cent at the end of the second quarter. The company maintained operating margin guidance of 20-22 per cent.
Infosys management said the guidance is based on positive trends such as rebound in its largest verticals – BFSI and manufacturing. While BFSI grew 6.1 per cent YoY in constant currency, manufacturing grew 10.7 per cent.
Infosys reported an 11.4 per cent YoY increase in net profit at INR 6,806 crore for the third quarter ended December quarter. On a sequential basis, profit rose 4.6 per cent from INR 6,506 crore in Q2 FY25.
Revenue for the third quarter stood at INR 41,764 crore, up 7.6 per cent YoY from INR 38,821 crore in Q3 FY24, while sequentially, it increased 1.9 per cent from INR 40,986 crore in the previous quarter.
"Our strong revenue growth sequentially in a seasonally weak quarter and broad-based year on year growth, along with robust operating parameters and margins, is a clear reflection of the success of our differentiated digital offerings, market positioning, and key strategic initiatives. We continue to strengthen our enterprise AI capabilities, particularly focusing on generative AI, which is witnessing increasing client traction", said Salil Parekh, CEO and MD. "This has led to another quarter of strong large deal wins and improved deal pipeline giving us greater confidence as we look ahead", he added.
Infosys said it will increase its hiring target to 20,000 freshers for the next fiscal compared with 15,000 this year.
"Clients continue to prioritize cost take-out over discretionary spending. The company has observed strong momentum in BFSI, with Europe joining the growth trajectory alongside US, and in the retail sector in the US. While the focus of clients remains on cost optimization, there is increased spending in emerging growth areas such as AI, cloud adoption, and cybersecurity," analysts at Motilal Oswal noted based on the management commentary.
The management said wage hikes will be implemented in two phases, starting in January and followed by the second phase in April. Wage growth in India is expected to be in the range of 6-8 per cent, while overseas growth will be in the low single digits. Utilization stood at 86 per cent, slightly above the comfortable range of 83-85 per cent preferred by the company.
