Infosys Q3 results: Net profit rises 11.4% to Rs 6,806 cr, revenue up 7.6%

IT major revises revenue guidance upwards for a third time in FY25 to 4.5-5 %

The pickup in discretionary spending in major markets like the US and Europe, combined with a strong performance in the third quarter (Q3) of 2024-25 (FY25), led India’s second-largest information technology (IT) services player, Infosys, to raise its revenue guidance for FY25 to 4.5-5 per cent in constant currency.

 

This is an increase from the guidance of 3.75-4.5 per cent provided in the second quarter/Q2 (July-September) of FY25.

 

This is the third time the company has revised its guidance. In the fourth quarter of 2023-24, the company had guided for a revenue growth of 1-3 per cent, which was revised to 3-4 per cent in the first quarter (Q1) of FY25. After the Q2FY25 results, the company again raised the guidance to 3.75-4.5 per cent.

 

 

What is positive about this guidance is that the increase applies to both the lower and upper ends. This indicates that growth momentum has started.

 

With Infosys revising its revenue guidance upwards, it signals better spending from clients.

 

The company reported an 11.4 per cent year-on-year (Y-o-Y) increase in its net profit, amounting to Rs 6,806 crore for Q3FY25. This beat the Bloomberg consensus estimate of Rs 6,773 crore. Sequentially, net profits were up 4.6 per cent.

 

Revenue for the quarter stood at Rs 41,764 crore, up 7.6 per cent Y-o-Y, above the Bloomberg consensus estimate of Rs 41,353 crore. Sequentially, revenue was up 1.9 per cent as clients continued to spend.

 

The company maintained its operating margin guidance of 20-22 per cent for FY25.

 

“In the last quarter (Q2), we saw discretionary spending in the US improving. This quarter, we have seen discretionary spending among European financial services players also improving. We also see the retail and consumer products sector in the US showing signs of improvement. We see this as a positive trend,” said Salil Parekh, chief executive officer and managing director, Infosys, during a media briefing. 

 

Infosys reported steady total contract value (TCV) for the quarter at $2.5 billion, compared to $2.4 billion in Q2. However, this was lower than the Q1FY25 TCV of $4.1 billion. The company said that while the TCV was almost the same, the proportion of net new deals was 60 per cent, up from 40 per cent in Q2FY25.

 

“Infosys has reported healthy Q3FY25 results despite Q3 seasonality and raised its guidance for FY25 on the back of improving discretionary spending in financial services and retail, along with strong headcount additions. We believe the company remains well-positioned to capture cost optimisation and transformation opportunities, given its strong domain knowledge and market-leading capabilities in Cloud with Cobalt and generative artificial intelligence (GenAI) with Topaz. We have a ‘buy’ rating on the stock,” said Shaji Nair, research analyst, capital market strategy, Mirae Asset Sharekhan.

 

Emkay Global Financial Services had a positive note on Infosys’ numbers, saying that revenue was a beat and margins were in line.

 

The margin for the quarter was 21.3 per cent, an increase of 0.8 per cent Y-o-Y and 0.2 per cent sequentially.

 

Infosys saw growth improvement across most of its verticals and geographies. North America was up 4.8 per cent in constant currency terms Y-o-Y, Europe grew 12.2 per cent, and India saw a 40 per cent increase. The rest of the world was down 11 per cent. The positive US growth in Q3 followed four quarters of decline.

 

By business segment, financial services grew 6.1 per cent Y-o-Y, manufacturing increased 10.7 per cent, high technology (hi-tech) rose 8.4 per cent, life sciences was up 6.3 per cent, and energy, utilities, communications and services grew 8.6 per cent. However, the company said that for the next quarters, it is cautious about segments such as communications, manufacturing, and hi-tech.

 

“We had another quarter of strong performance, with revenue growth across segments and operating margin expansion, leading to 11.4 per cent earnings per share growth Y-o-Y in rupee terms. Our compensation rollout is happening in two phases. The first phase is effective in January, and the second rollout will be in April,” said Jayesh Sanghrajka, its chief financial officer.

 

Infosys has announced an average salary hike of 6-8 per cent for employees in India.

 

Parekh added that the company’s differentiated approach to GenAI is creating opportunities. Infosys has built four small language models for banking, IT operations, cybersecurity, and enterprise.

 

"We are also developing 100 new agents for deployment within our client ecosystem. Many of them are using agents we have developed,” he added.

 

Infosys to hire 20K freshers in FY26

 

Aside from the improvement in business metrics, Infosys also announced its hiring plans for 2025-26 (FY26). The company said that for FY26, it intends to onboard 20,000 campus recruits. Infosys also added that for FY25, it is on track to onboard 15,000 freshmen, as previously announced.

 

For Q3, the company saw its headcount increase by 5,591 employees. This marks the second consecutive quarter of headcount growth. At the end of Q3FY25, the headcount stood at 323,379. Attrition for the company also inched up to 13.7 per cent in Q3, up from 12.9 per cent in Q2.

 

While Tata Consultancy Services has not announced the total number of campus hires for FY26, the company said that it will be higher than FY25. In the current financial year (FY25), the Mumbai-headquartered firm will onboard 40,000 freshers.