Infosys Q2 FY25 results! How did INFY perform? | Equentis- Research and Ranking

Summary

Infosys, a leading Indian IT services company, reported a 4.2% revenue growth to ₹4,986 crore for Q2 FY2025, yet saw a 4% stock decline due to missed estimates. The report highlights the challenges posed by high interest rates impacting IT budgets and demand, particularly from the US and Europe. Operating margins improved to 21.1%, but deal wins fell significantly. Looking ahead, Infosys forecasts a revenue growth of 3.75% to 4.5% for FY2025, supported by anticipated rate cuts by the US Federal Reserve, which could bolster IT spending across sectors.

Takeaways

• 📉 Infosys reported a decline in stock price by over 4% after missing financial estimates for Q2 FY 2025.
• 🌍 The global IT sector is facing challenges due to high interest rates imposed by central banks, impacting IT budgets.
• 📈 Infosys achieved revenue of 4,986 CR in Q2, marking a 4.2% increase from the previous quarter and a 5.1% increase year-on-year.
• 💰 The company's profit for the quarter was 6,516 CR, showing a 2.2% quarterly growth and a 4.8% growth compared to the same period last year.
• 🇺🇸 North America remains a crucial market for Infosys, contributing 57.4% to revenue but showing a slight decline of 2.6% this quarter.
• 🇪🇺 Revenue contribution from Europe has grown by 16.7%, now accounting for 29.4% of Infosys's total revenue.
• 🏦 The Financial Services sector is a significant vertical for Infosys, representing 27.5% of total revenue.
• 📊 Infosys reported operating margins of 21.1%, reflecting the company's core business profitability.
• 🤝 The total contract value from new deals amounted to $2.4 billion, with 41% being new contracts, although this reflects a 68% decline from the same period last year.
• 🔮 Looking ahead, Infosys anticipates revenue growth of 3.75% to 4.5% in FY 2025, supported by improved spending in financial services.

Q & A

What was the performance of Infosys stock after announcing its Q2 results for fiscal 2025?

The stock of Infosys declined by more than 4% as it missed street estimates despite reporting its Q2 results for fiscal 2025.

How has the global economic environment impacted Indian IT companies?

The global economic environment, characterized by high interest rates set by central banks like the US Federal Reserve and the RBI, has led to expensive borrowing. This caused businesses to cut back on investments, including IT budgets, which directly affected Indian IT companies.

What was the revenue growth of Infosys for Q2 fiscal 2025?

Infosys reported revenues of 4,986 crore, marking a 4.2% increase compared to the previous quarter and a 5.1% growth compared to the same quarter last year.

How did Infosys perform in terms of profitability in Q2 fiscal 2025?

Infosys reported a profit of 6,516 crore, showing a 2.2% growth on a quarterly basis and a 4.8% growth year-on-year.

What was the regional breakdown of Infosys' revenue for Q2 fiscal 2025?

In Q2 fiscal 2025, Infosys' revenue from North America declined by 2.6% to 57.4%. Revenue from Europe grew by 16.7% to 29.4%, while India contributed only 3.1% of the total revenues.

Which industry sector contributed the most to Infosys' revenue?

The Banking, Financial Services, and Insurance (BFSI) sector contributed the most to Infosys' revenue, making up 27.5%, followed by the manufacturing sector at 15.7%.

What are the operating margins of Infosys for Q2 fiscal 2025?

Infosys reported operating margins of 21.1% for Q2 fiscal 2025.

How did Infosys' deal wins perform in Q2 fiscal 2025?

Infosys secured deal wins with a total contract value of $2.4 billion, with 41% of those being new deals. This represents a 68% decrease compared to the same period last year.

What are the key metrics for evaluating the efficiency of IT companies, and how did Infosys perform?

The utilization rate is a key metric for evaluating the efficiency of IT companies. For Infosys, the utilization rate stood at 84.3% including trainees and 85.9% excluding trainees, both slightly better than the previous quarter and the year-ago period.

What is the future outlook for Infosys in fiscal 2025?

Infosys expects a revenue growth of 3.75% to 4.5% in constant currency terms for fiscal 2025, driven by improved spending in the BFSI sub-segments. Operating margins are expected to remain between 20% and 22%.