IT major Infosys recorded sequential revenue and profit decline in the third quarter. The company tightened the revenue guidance, as it remains bogged down by seasonal weakness and continued damp demand environment amid uncertain macro conditions.
The net profit for the quarter stood at ₹6,106 crore, a 7.3 per cent decline year-on-year (YoY). Quarter-on-quarter (QoQ), profit dipped 1.7 per cent from ₹6,212 crore in Q2. Revenue from operations rose 1.3 per cent YoY at ₹38,821 crore. Sequentially, revenue marginally decreased 0.4 per cent. While revenue fell in line with market expectation, profits were a miss. Infosys’ outlook for the rest of the year remains soft as it narrowed its guidance from 1-2.5 per cent last quarter to 1.5-2 per cent.
Salil Parekh, CEO and MD, said, “As we get closer to the end of the financial year, we have tightened the revenue growth guidance, so we see the outlook in essence quite similar.”
The total contract value of large deals in Q3 stood at $3.2 billion, with 71 per cent net new additions, lower than $7.7 billion booked in Q2, when multiple mega deals were signed. The management noted that the earlier wins and the current momentum were a good augury for future.
Operating margins
Operating margins for Q3 stood at 20.5 per cent, tad lower than 21 per cent of Q2. The margin guidance, however, has been retained at 20-22 per cent.
Nilanjan Roy, Chief Financial Officer, said, “This quarter, wage hike had an effect of 70 basis point, and we have had another impact of $30 million between revenue and cost because of the McCamish incident, a 1.3 per cent headwind. We have compensated that with 50 basis points from Project Maximus which is in full flow, across verticals.” Total headcount fell by 6,101 to 3,22,663, from 3,28,764 last quarter. Voluntary attrition in Q3 dropped to 12.9 per cent from 14.6 per cent the last quarter.
Buys InSemi
The IT major announced a definitive agreement to acquire InSemi, a semiconductor design and embedded services provider, for ₹280 crore.
Sanjeev Hota, Head of Research, Sharekhan by BNP Paribas, said, “We view Infosys Q3 earning as stable in a seasonally weak quarter and expect focus to shift to earnings improvement in FY25/26, as headwinds bottom out.”
With inputs from BL Intern Sanjana B
