IT major Infosys raises growth guidance, buoyed by strong deal pipeline

The net profit of information-technology (IT) services firm Infosys in April-June rose 8.7 per cent to ₹6,921 crore, helped by an interest income of ₹327 crore and net tax provisions of ₹101 crore for previous assessment years reversing.

 

Sequentially net profit was down 1.6 per cent.

 

Revenue was up 7.5 per cent to ₹42,279 crore, supported by strong deal wins in financial services and manufacturing businesses even in a subdued macroeconomic environment.

 

Revenue was up 3.3 per cent on quarter-on-quarter.

 

Both the numbers beat Bloomberg estimates, where analysts had estimated a net profit of ₹6,778 crore and revenue of ₹41,724 crore.

 

Backed by large deals worth $3.8 billion, India’s second-largest software-services provider raised the lower end of its guidance to 1 per cent from nil growth it had guided a quarter earlier. At the top end, it still expects to grow 3 per cent on constant currency for the full year.

 

“It is a quarter of strong deal wins that helped us to raise the guidance at the lower end. At the upper end, we still see uncertainty and the impact of tariffs,” Chief Financial Officer Jayesh Sanghrajka said on Wednesday.

 

Infosys’ numbers stand out in a tepid quarter for Indian IT companies. Revenue growth in dollars was 4.8 per cent over the same period a year earlier. This was the best after HCLTech, which grew at 5.4 per cent.

 

However, on a constant-currency basis, which discounts the impact of currency volatility, Infosys led the pack with 3.8 per cent growth. Its larger rival TCS saw revenue dropping by 3.1 per cent.

 

Compared to TCS, Infosys also stood out as it saw growth in the BFSI (banking, financial services, and insurance) vertical in the United States (US). The management said that growth in the US was particularly strong in the financial segment.

 

“The large deals are working well. They include mega deals ... Clients are also focused on the cost and efficiency of their own operations and so these large deals benefited from vendor consolidation,” said Chief Executive Officer and Managing Director Salil Parekh said.    ALSO READ: Net FDI plunges to $40 million in May 2025 as outward flows accelerate

 

Brakes on discretionary spending, fuelled by a bleak macroeconomic environment and clouded by tariff and trade negotiations by the US, have prompted customers across businesses to rein in costs.

 

Hence, large deals, which take time to materialise, are what the companies are looking for. However, these deals come with heavy upfront investment and intense competition, and are revenue-accretive after some time. That immediately impacts the margins. Infosys’ operating margins are down 30 basis points to 20.8 per cent in the first quarter compared to last year as it increased salaries in April for a large portion of its employees.

 

The fact that the company still expects full-year margins to be 20-22 per cent despite some improvement in deal visibility and pipeline indicates that it will be under pressure.

 

“There are headwinds of lower growth, the fixed costs will play out, and the impact of wage increases and large deals will ramp up cost,” said Sanghrajka.

 

Shaji Nair, research analyst, Mirae Asset Sharekhan, said Infosys reported strong Q1 revenue growth, beating estimates, while the margins were largely in line with the consensus despite a challenging environment.

 

“Growth was aided by pricing, AI productivity benefits, and broad-based growth across verticals. Large-deal TCV (total contract value) wins were robust and exceeded the average of the last four quarters. The company with strong traction in financial services, leadership positioning in AI enterprise, and growing AI adoption make it well positioned to capture cost optimisation, AI-driven transformation opportunities and vendor consolidation opportunities,” said Nair.

 

Financial services and manufacturing, which contributed 28 per cent and 16 per cent to the top line, respectively, were up 5.6 per cent and 12.2 per cent. Growth in manufacturing was a contrast at a time when other companies have seen their revenue hammered due to tariff fears.

 

North America was up 0.4 per cent year-on-year on a constant-currency basis, but Europe grew 12.3 per cent.

 

“All businesses in North America are seeing good traction. In financial services for our 20 large clients, in half of them we are the AI partner of choice,” said Parekh.

 

Infosys added just 210 people during the last quarter and its employee headcount was 323,788 at the end of June 30.

 

Voluntary attrition, on the last 12-month basis for IT services, inched up to 14.4 per cent from 12.7 per cent a year ago.

 

Utilisation, excluding trainees, was 85.2 per cent, which was similar to the levels of other IT firms.

 

The company HAS maintained it will hire 20,000 fresh engineering graduates this financial year. TCS and Wipro have also stuck to their previously stated numbers but have also cautioned that the final numbers will depend on the demand environment.