Infosys Q1 net profit rises 7%, hikes FY25 growth outlook

With improvement in business, Infosys has shared plans to hire 15,000-20,000 freshers depending on the growth during the year.

The company has been reporting continuous decline in headcount since March 2023 quarter.

In the year-ago period, the company clocked a profit of Rs 5,945 crore, according to a BSE filing.

Sequentially, the net profit in April-June fell 20 per cent from Rs 7,969 crore in the preceding January-March quarter.

The consolidated revenue of Infosys increased by 3.6 per cent to Rs 39,315 crore during the reported quarter from Rs 37,933 crore a year ago.

For the current fiscal year, the company raised its revenue growth guidance to 3-4 per cent in constant currency terms from 1-3 per cent projected earlier.

"We had an excellent start to FY25 with strong and broad-based growth, operating margin expansion, robust large deals, and the highest ever cash generation.

“This is a testimony to our differentiated service offerings, enormous client trust, and relentless execution," said CEO and MD Salil Parekh.

The company's operating margin during the quarter stood at 21.1 per cent.

Infosys expects its operating margin to be 20-22 per cent in the current fiscal year.

"With our focused approach for generative AI for enterprises working with their data sets on a cloud foundation, we have strong traction with our clients.

“This is building on our Topaz and Cobalt capabilities," Parekh added.

The company won large deals worth $4.1 billion during the quarter.

"We had very strong performance on large deals in the first quarter, which gives us more visibility into the full year," Parekh said.

He said there was an improvement in the financial services segment in the US, but the macroeconomic environment which impacts clients discretionary spending is still slow compared to the level it was several quarters ago.

"I think the sense we have on discretionary spend, which is a function of macro as it impacts our clients, is still the same as what we were seeing in the past quarters with the exception that we saw a little bit better outcome for financial services in the US. Otherwise, it's the same.

"Discretionary is still low from where it was several quarters ago," Parekh said.

While the retail segment's share fell 3 per cent to 13.8 per cent, the communication segment's share rose 5.4 per cent to 12.1 per cent and energy, utilities, resources, and services grew 6.3 per cent to 13.3 per cent on a constant current basis.

"Engineering services is one of those areas which is growing well for us.

“We are seeing a lot of traction in the automotive space, medical devices space, broadly across all elements of engineering services.

“We have had now two acquisitions that we have done on that," Parekh said.

He said the company is witnessing improvement in financial service revenue in the US.

While revenue share of Infosys from North America fell by 1.2 per cent, in Europe it increased by 9.1 per cent, India 19.9 per cent and the rest of the world 2.3 per cent on a constant currency basis.

The company's headcount fell by about 6 per cent to 315,332 in June 2024 quarter from 336,294 a year ago.

The headcount fell marginally from 317,240 in the previous quarter.

The company has increased the utilisation level of employees to 83.9 per cent from 78.9 per cent on a year-on-year basis.

"Our utilisation is already at 85 per cent.

“ So we have little headroom now left. So you know, as we start seeing growth...we are looking at hiring 15,000 to 20,000 freshers this year depending on...how we see the growth," Infosys chief financial officer Jayesh Sanghrajka said.

He said that some of the earlier placement offers are still pending and the hiring will be a combination of from the campus and off campus depending on the demand environment.