Indian IT giant Infosys reported a modest year-on-year increase in consolidated profit and revenue in its recent Q2FY24 results, aligning with market expectations. However, a surprising revision in revenue estimates for the fiscal year 2024 has drawn attention. Despite this, Infosys remains optimistic about its future performance, emphasizing strong H1 results and focusing on large deals and Generative AI solutions.
Here are the key highlights from Infosys’ Q2FY24 performance:
Revenue and Profit Numbers
Infosys recorded Q2 revenue of ₹38,994 crore, reflecting a 6.7% YoY increase. In constant currency (CC) terms, the company achieved a 2.5% YoY growth and a 2.3% QoQ increase.
The consolidated net profit for Q2FY24 was ₹6,212 crore, a 3.2% YoY rise from ₹6,021 crore in the previous year.
Sequentially, the consolidated net profit increased by 4.5%. Revenue from various business segments showed mixed results, with financial services and communication witnessing declines in CC terms, while life sciences, manufacturing, and retail experienced substantial growth.
Margins
Infosys reported an operating margin (EBIT) of 21.2% for Q2FY24. This figure represented a marginal 0.3% YoY decrease but a 0.4% QoQ increase.
The CFO of Infosys, Nilanjan Roy, attributed this performance to the benefits of their margin improvement plan and their continuous pursuit of operational efficiencies.
Attrition and Hiring
Infosys noted a significant decrease in attrition, dropping 14.6% in Q2FY24 from 27.1% YoY and 17.3% QoQ.
At the end of the quarter, the company’s workforce stood at 3,28,764 employees, showing a decline from the previous year’s 3,45,218 employees and the first quarter’s 3,36,294 employees.
FY24 Revenue Guidance
Infosys revised its revenue guidance for the fiscal year 2024, now expecting revenue growth of 1-2.5% in constant currency terms.
Despite other changes, the company maintained its 20-22% guidance for the year’s operating margin.
Infosys had adjusted its FY24 revenue guidance in the Q1FY24 results, reducing it from 4-7% to 1-3.5%.
Major Deals and Collaborations
One of the standout achievements in Q2FY24 was Infosys securing its highest large deals, valued at $7.7 billion, spanning various verticals and geographies.
The company also extended its collaboration with Liberty Global, focusing on enhancing digital entertainment and connectivity platforms.
Additionally, Infosys partnered with Microsoft to accelerate the adoption of generative AI across the industry and joined forces with NVIDIA to help enterprises enhance productivity with generative AI solutions.
Dividend
Infosys announced an interim dividend of ₹18 per equity share for FY24, with the record date on 25 Oct 2023 and the payout date on 6 Nov 2023.
Infosys has distributed 48 dividends since October 2000. In the past year, it declared an equity dividend of ₹34 per share. With a current share price of ₹1,465.70, the dividend yield has been computed at 2.32%, benefiting investors.
Infosys stock is expected to trade ex-dividend before the record date of the interim dividend. The ex-dividend date is crucial for investors to consider as shareholders retain eligibility to receive the dividend payment.
Summary
Infosys’ Q2FY24 results demonstrated steady growth in revenue and profit, with a strong emphasis on large deals and the adoption of Generative AI offerings.
While a revision in revenue guidance raised eyebrows, the company remains confident about its ability to adapt and provide value in an ever-evolving business landscape.
The focus on innovation and collaboration with industry leaders positions Infosys for a promising future.
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