Infosys Quarter 2 Results: Profit Up by 2.2%

Introduction

Infosys Ltd. announced its financial results for the quarter ended September 30, 2024. The Indian IT major reported a net profit of ₹6,506 crores, reflecting a quarter-on-quarter increase of 2.2% from ₹6,368 crore, although it fell short of analysts' expectations. Revenue for the same quarter rose to ₹40,986 crore, marking a healthy growth of 4.2% on a quarterly basis. 

Quick Insights

• Revenue: ₹40,986 crore, up by 4.2% YoY.  
• Net Profit: ₹6,506 crore, increased by 2.2% compared to the previous quarter.  
• Segment Performance: The financial services segment showed significant momentum, driven by strong industry expertise and cloud solutions.  
• Management's Take: “Strong growth driven by broad based demand across various sectors, particularly in financial services. Outlook remains positive.”  
• Stock Reaction: Infosys Quarter 2 result announced post market hour of 17-10-24 thus the share market reaction could be observing tomorrow market hour.

Management Commentary  

Salil Parekh, CEO and MD of Infosys, stated, “We had strong growth of 3.1% quarter-on-quarter in constant currency terms in Q2. This growth was broad based, with good momentum in financial services. Our strengths in industry expertise and market leading capabilities in cloud with Cobalt and generative AI with Topaz are leading to growing client preference to partner with us.” 

The management emphasized their commitment to navigating the challenging IT landscape, particularly with the increasing focus on generative AI and cost optimization initiatives. Infosys has raised its fullyear revenue growth guidance for FY25 to a range of 3.754.5%, surpassing the previous guidance of 34%.

Stock Market Reaction 

Following the announcement of the results, Infosys shares experienced volatility in the stock market. Analysts had expected a stronger performance; the Infy Result announced post the market hours thus no reaction has recorded.

About the Company 

Infosys is one of India’s largest IT service providers, known for its expertise in various sectors, including financial services, healthcare, and manufacturing. The company has consistently paid dividends to its shareholders and has a robust capital allocation policy in place. This quarter, Infosys declared an interim dividend of ₹21 per share, with October 29 set as the record date and November 8 as the payout date. This marks a 16.7% increase from the previous year’s interim dividend of ₹18 per share.

In addition to the quarterly results, Infosys's strong performance in large deals was highlighted, with a total contract value (TCV) of $2.4 billion secured in the quarter. This showcases the company's competitive edge in securing high value contracts despite the challenging market conditions.

What’s Coming This Week

Investors and analysts will closely monitor Infosys as it navigates the evolving landscape of IT services, particularly with the anticipated growth in generative AI initiatives. The company’s acquisition of R&D services provider in Tech is also expected to contribute to future growth. As Infosys aims to maintain its industry leadership, stakeholders are eager to see how it leverages its technological capabilities and strategic partnerships.

With a total dividend declared for FY24 reaching ₹46 per share, Infosys continues to demonstrate its commitment to returning value to shareholders. The company's dividend history reflects a consistent increase, with total dividends rising from ₹31 per share in FY22 to ₹34 per share in FY23.

As the Indian IT sector faces increasing competition and market challenges, Infosys's results will serve as a critical indicator of its resilience and growth strategy moving forward. The upcoming fiscal quarters will be pivotal as the company adapts to new market demands and technological advancements. 

Conclusion

While Infosys's Q2 results indicate steady growth, the missed profit estimates signal the need for continued vigilance in executing its strategic initiatives. Investors will be looking to the company for insights into how it plans to harness emerging technologies and maintain its growth trajectory in the competitive IT landscape.