Stock in Action – Infosys Ltd

Highlights

1. Infosys Q1 FY25 Results showcased strong start to fiscal year with 7.1% increase in net profit.

2. Infosys Q1 Earnings Report revealed consolidated PAT of ₹6,368 crore, reflecting robust financial health.

3. Infosys Net Profit 2024 rose by 7.1% YoY to ₹6,368 crore, exceeding market expectations.

4. Infosys Revenue Growth 2024 was up by 3.6%, reaching ₹39,315 crore, indicating steady business expansion.

5. Infosys Share Price Target sees potential upside as company reported better-than-expected Q1 earnings.

6. Infosys Q1 Performance Highlights include record large deal wins & highest-ever cash generation.

7. Infosys Financial Services Growth was notable, with segment growing to 27.5% in Q1 FY25.

8. Infosys Large Deal Wins hit record high of 34 deals worth $4.1 billion, boosting investor confidence.

9. Infosys FY25 Revenue Guidance was upgraded to 3-4% in constant currency, reflecting positive market outlook.

10. Infosys Attrition Rate 2024 decreased to 12.7%, showing improved employee retention.

Why Infosys Share is in Buzz?

Infosys, India's second-largest IT services company, has captured market attention with its Q1 FY25 results, showing 7.1% year-on-year (YoY) rise in net profit to ₹6,368 crore & 3.6% increase in revenue from operations to ₹39,315 crore. company's performance exceeded street estimates, leading to surge in its share price & significant interest from investors. company's strong performance in large deal wins, robust operating margins, & positive revenue growth guidance for FY25 have contributed to its buzz in stock market.

Highlights of Quarter 1 FY25 Performance of Infosys

Profit & Revenue Growth

- Net Profit  Infosys reported consolidated Profit After Tax (PAT) of ₹6,368 crore for quarter ending June 30, 2024, 7.1% increase from ₹5,945 crore in same period last year.

- Revenue  Revenue from operations for Q1 FY25 reached ₹39,315 crore, 3.6% rise from ₹37,933 crore in corresponding quarter of previous financial year.

EBIT & Guidance

- EBIT Margin  company reported EBIT margin of 21.1%, up 30 basis points from previous quarter.

- Revenue Growth Guidance  Infosys raised its constant currency revenue growth guidance for FY25 to 3%-4%, up from earlier guidance of 1%-3%.

- Operating Margin Guidance  operating margin is projected to range from 20% to 22% for current financial year.
Segment-wise Performance

- Financial Services  Growth increased to 27.5% from 26.4% in Q4FY24.

- Retail  Slight decline to 13.8% from 14.3% in Q4FY24.

- Communication  Increase to 12.1% from 12.3% in Q4FY24.

- Energy, Utilities, Resources & Services  Steady growth at 13.3% from 13.4% in Q4FY24.

- Manufacturing  Maintained growth at 14.7%.

- Hi-Tech  Slight decrease to 8% from 8.7% in Q4FY24.

- Life Sciences  Consistent growth at 7.3%.

Attrition & Headcount

- Voluntary Attrition  Reported at 12.7%.

- Total Headcount  315,332, marking 0.6% decrease from 317,240 in March 2024 & 6.23% decrease from 336,294 in June 2023.

Large Deals & Cash Generation

- Large Deals  Highest ever at 34 with Total Contract Value (TCV) of $4.1 billion, with 57.6% being net new.

- Cash Generation  Infosys reported its highest-ever free cash flow at $1.1 billion & return on equity of 33.6%.

Brokerage Overview about Infosys Shares 

Following Q1 results, several brokerages have revised their outlook on Infosys shares, largely raising their target prices & expressing optimism about company's future prospects.

Jefferies
- Outlook  Suggested 'Buy' rating with 16% potential upside.
- Comments  guidance upgrade seems conservative given strong deal wins.

PhillipCapital
- Outlook  Price target set at ₹2,140.
- Comments  Positive outlook due to beat on topline & margins, broad-based growth, & strong cash generation.

Motilal Oswal Financial Services (MOFSL)
- Outlook  Price target set at ₹2,000.
- Comments  Encouraged by growth recovery in North America & financial services, despite pressure on discretionary spending.

Nuvama
- Outlook  Increased target price to ₹2,050.
- Comments  Management’s upbeat anticipation of recovery in US-BFS & stronger first half than second half.

 Nirmal Bang
- Outlook  Maintained ‘Accumulate’ rating with target price of ₹1,985.
- Comments  Valued stock with 10% discount to target PE multiple accorded to TCS.

Fundamental Analysis for Infosys Shares

Financial Performance
Infosys demonstrated strong financial performance in Q1 FY25, with notable increase in net profit & revenue. company's operating margin improvement & robust cash generation reflect efficient cost management & operational effectiveness.

Market Position & Growth Prospects
As India's second-largest IT services company, Infosys has strong market position with significant large deal wins & broad-based growth across segments. raised revenue growth guidance & high levels of cash generation indicate positive growth prospects.

Operational Efficiency
 improvement in operating margins & high utilisation rates, along with strong deal wins, show Infosys's operational efficiency. company's focus on cost optimisation through initiatives like Project Maximus further supports its ability to maintain & enhance margins.

Employee Metrics
While voluntary attrition rate remains challenge, Infosys's headcount management & plans to hire 15,000-20,000 freshers in FY25 demonstrate its commitment to maintaining skilled workforce to support growth.

Valuation & Investor Sentiment
Brokerages have largely raised their target prices for Infosys shares, reflecting increased confidence in company's growth trajectory & strong fundamentals. company's ability to beat street estimates & provide optimistic outlook has positively influenced investor sentiment.

Infosys Competitive Position

Infosys's focus on digital transformation & generative AI, coupled with its robust service offerings, positions it well against competitors like TCS & HCL Technologies. company’s efforts to narrow valuation gap with TCS highlight its strategic initiatives to capture market share & drive growth.

In summary

Infosys's strong Q1 FY25 performance, coupled with positive brokerage outlooks & solid fundamental metrics, make it compelling stock in IT services sector. company's strategic focus on growth, operational efficiency, & market expansion supports its position as key player in industry.