Infosys Q2 results preview: Increased transactions, revenue up 3.7%; PAT likely to rise 5.8% QoQ

Infosys, India’s second-largest IT services company, will announce its second-quarter fiscal 2025 earnings on Thursday, October 17. The IT giant is expected to post revenue growth driven by big deals, but margin growth is likely to remain steady.

For the second quarter ending September 2024, Infosys revenue is expected to grow 3.74% to $40,785 Crores from $39,315 crore in the previous quarter. In U.S. dollar terms, second-quarter revenue is expected to increase 3.2% quarter-on-quarter from $4.714 billion to $4.865 billion, according to a Livemint survey of eight brokerages.

Net profit of IT major in the second quarter of FY25 is expected to increase by 5.86% $6,741 Crores Rs. $6,368 crore in the first quarter of FY25.

Revenue growth is likely to be driven by tech acquisitions, an automotive-focused ERD company, seasonal strength, residual growth from large deals and slightly higher contribution from third-party sales revenue at 90 basis points in June 2024, according to data from Kotak Institutional Equity Software After a sharp quarterly decline.

Analysts expect the TCV of large deals to be $3 billion, a sharp quarter-on-quarter decline mainly due to the normalization of deals following a spate of announcements in previous quarters.

operating results

On the operational front, Infosys’ earnings before interest and tax (EBIT) for the quarter ending September 2024 is expected to be $8,636 crore, an increase of 4.20% over the previous year $8,288 crore in the June quarter. Thanks to strong growth and operating efficiency, EBIT margin is likely to improve 7 basis points from the previous quarter to 21.17% from 21.1%.

guide

Kotak Equities expects Infosys to raise its revenue growth guidance to 4-5% for FY25 from the previous 3-4%. Guidance implies a CAGR of +0.5% at the low end and +0.8% at the high end for the remainder of fiscal 2025.

The guidance range for EBIT margin is expected to remain unchanged at 20-22%.

Going forward, investors are likely to focus on the state of discretionary spending across various verticals, especially financial services, strong deal pipeline over the past four quarters, senior management attrition, profit leverage and wage hike announcement cycles, and revenue mix , that is, revenue from sales of third-party items.

Infosys stock price

Infosys shares have delivered decent returns this year, with the IT stock up over 11% in three months and over 24% year-to-date (YTD). Infosys stock price has risen by more than 33% in the past one year.

In comparison, the Nifty IT index has returned 7.9% in three months and is up 19% year-to-date. The index is up 33% in a year.

On Wednesday, Infosys shares fell 2.05% to close at $1,918.95 per person on BSE.

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