Infosys : Profit Surges 30% Despite Muted Revenue Growth, FY25 Guidance Signals Caution

Bengaluru, April 17, 2024 — Infosys, India’s second-largest IT services company, has reported its financial results for the quarter ended March 2024, revealing a strong profit jump amid weak revenue growth and a cautious outlook for FY25.

Strong Profitability, Soft Revenue

Infosys posted a net profit of ₹7,969 crore for Q4 FY24, a robust 30% year-on-year increase, aided by cost optimization, tax credits, and higher other income. However, revenue rose only 1.3% YoY to ₹37,923 crore and declined 2.3% sequentially, highlighting persistent client caution and delays in discretionary spending.

The company’s operating margin stood at 20.1%, down from 21% in the previous year, as pricing pressure and slow project ramp-ups impacted margins.

Muted Guidance for FY25

For FY25, Infosys has projected a revenue growth of 1–3% in constant currency, its most conservative outlook in recent years. The company expects operating margins to be in the range of 20–22%.

“We’re seeing softness continue in client spends, particularly in transformation and discretionary projects. However, we’re confident in our ability to drive efficiencies and deliver value through digital and AI-led services.” — Salil Parekh, CEO & MD

Dividend Payout and Strong Cash Position

Infosys announced a final dividend of ₹20 per share and a special dividend of ₹8, bringing the total dividend for FY24 to ₹46 per share. The company also reported $848 million in free cash flow, its highest in nearly three years.

Strategic Acquisition in Europe

The company is acquiring Germany-based in-tech GmbH, an engineering R&D services provider, for €450 million. The acquisition enhances Infosys’ capabilities in the automotive, rail, and smart mobility sectors, aligning with its strategy to expand into high-value digital engineering segments.

Generative AI Momentum

Infosys is accelerating its focus on Generative AI, delivering over 300 active AI projects for clients and generating more than 3 million lines of code using public-domain LLMs. The company is also among the first globally to achieve the ISO 42001:2023 certification for AI management systems.

“Clients are increasingly looking at GenAI as a transformation lever. Our investments in AI, data, and cloud are beginning to see significant traction.” — Salil Parekh

Workforce Update

Infosys’ total employee count stood at 317,240 at the end of the quarter, down 7.5% from the previous year. Attrition improved sharply to 12.6%, down from 20.9% a year earlier. The company continues to invest in upskilling and internal mobility as part of its talent strategy.

Investor Reaction and Outlook

Infosys shares opened lower following the results, as the muted FY25 revenue guidance weighed on investor sentiment. Analysts noted that the company’s strong execution and large deal pipeline offer medium-term stability, though near-term demand challenges remain.

Looking ahead, Infosys aims to position itself as a long-term transformation and reinvention partner for clients, leveraging its investments in AI, engineering, and cloud technologies.

“We are evolving from being a transformation partner to a reinvention partner.” — Salil Parekh

Disclosure: The article is based on Infosys’ Q4 FY24 earnings release, official press conference transcript, and market updates from verified financial news sources.