Infosys Q1FY25 Results Preview: Net profit likely to decline 20.9% sequentially, margins may expand by 30 bps

Bengaluru-headquartered IT services major Infosys will release its June quarter earnings on July 18. Zee Business research desk estimates consolidated revenue at the company for the reporting quarter to increase by 2.6 per cent sequentially to Rs 38,900 crore versus Rs 37,923 crore reported in the previous March-ended quarter. Ramp-up of large deals as well as absence of one-offs related to the BFSI segment could likely aid revenue at the firm.

The revenue in dollar terms is also projected to log 2.1 per cent growth quarter-on-quarter (QoQ) to Rs 466.1 crore in comparison to Rs 456.4 crore reported in the previous quarter. In constant currency terms, revenue is seen to grow by 2.3 per cent sequentially.

Infosys’ Q1 earnings before interest and taxes (EBIT), a profitability metric, is seen to register 4 per cent growth sequentially to Rs 7,925 crore as against Rs 7,621 crore in Q4FY24.

Growth leverage, absence of one-off impact and operational efficiency are margin tailwinds partly offset by large deal transition costs, added InCred Equities.The desk estimates margins to expand by 30 bps from 20.1 per cent reported in Q4FY24 to 20.4 per cent in the quarter gone-by. This is as delayed wage revision lends support and the impact will be later in the year,

AnandRathi in its update on the sector said Q1 margins are expected to vary across companies depending on the wage revision cycle.

Nevertheless, consolidated net profit at the company in the June quarter is estimated to slump 20.9 per cent sequentially to Rs 6,300 crore as against Rs 7,969 crore reported in the previous quarter. InCred Equities attributes this likely decline in PAT to the absence of income-tax refunds and lower other income.

Furthermore, the desk expects the IT services provider to maintain 1-3 per cent CC earnings growth and 20-22 per cent EBIT margin guidance for FY25.

Key monitorables

The stakeholders and other investors will watch out for deal TCVs and pipeline, attrition, pricing, 
FY25F guidance, outlook on ramp-up of large deals, vertical commentary, and outlook on client budgets, pricing and margin levers.

Infosys stock price performance 

Ahead of its results on July 18, the stock ended higher by over 1 per cent at Rs 1,725.8 per share after hitting a fresh 52-week high in trade today of Rs 1,737.50. The stock over the past year has gained 21 per cent.