Infosys will announce its first-quarter earnings for FY25 on July 18. While it registered flat revenue growth in the fourth quarter of the previous fiscal, the IT giant is expected to witness some favourable outcomes. Here are five performance indicators to keep an eye on:
Vertical Growth
According to a Motilal Oswal Financial Services report, verticals like BFSI and Communications have been under pressure for the past 5-6 quarters. However, an IDBI Capital report estimates that for Infosys, BFSI growth in FY25E is expected to be better than in FY24. “Manufacturing would see slower growth and could improve with traction in areas like IoT, supply chain, marc manufacturing, and Retail is seeing improvement led by cost take out deals and Generative AI,” said the report.
Revenue growth
Revenue is predicted to rise to over ₹38,800 crore, a significant improvement from last quarter’s ₹37,923 crore and Q1 FY24’s ₹37,933 crore. The IT giant is reported to experience a relatively strong revenue growth of 2.0-2.4 per cent, according to a poll of brokerages.
Margin & Guidance
Infosys is likely to record an earnings before interest and tax (EBIT) margin of between 20.4 per cent and 21.15 per cent, according to a poll of brokerages. This is a slight increase from Q4 FY24’s recorded operating margin of 20.1 per cent. However, compared to 20.8 per cent in the first quarter of the previous fiscal, margins are expected to remain somewhat steady on a year-on-year (YoY) basis. Brokerages expect EBIT margins to expand in the 30-99 bps range.
Meanwhile, most brokerages also predict that Infosys will maintain its growth guidance of 1-3 per cent CC for FY25.
Deals & TCV
In Q4, the large deal total contract value (TCV) stood at $4.5 billion, marking sequential growth from Q3’s $3.2 billion.
Motilal Oswal notes that the deal TCV is likely to be robust in the first quarter of the new fiscal. “While spending patterns remain largely unchanged, deal wins over the past few quarters should start accelerating this quarter. This should offer some respite to growth rates for these verticals, especially for Infosys as the base becomes more favourable,” read the report.
Attrition & Hiring
In the last quarter, Infosys had a headcount of 317,240 employees, a decline of 19,054 from Q1’s 336,294. Q4 saw a voluntary attrition rate of 12.6 per cent as opposed to Q1’s 17.3 per cent, indicating a sequential decline during the fiscal. According to a Prabhudas Lilladher report, hiring is expected to be moderate across the sector. “The current demand slowdown, headroom for further improvement in utilization (on freshers), and moderating attrition are more than compensating the required resource fulfilment. Additionally, the industry bench rate has trimmed substantially to 10-15 per cent, from 30 per cent earlier, leading to slower talent recruitment,” read the report.