Infosys, India’s second-largest IT services exporter, reported a 30% year-on-year (YoY) rise in net profit for the fourth quarter (Q4) of FY24. The company’s revenue saw a growth of just 1.3% to touch Rs 37,923 crore.
Infosys registered a net profit of Rs 7,969 crore in Q4 FY24, including Rs 1971 crore income the company received from interest income and reversal of tax provisions from the Income Tax authorities, which otherwise would have led to a decline in net profit.
However, it was disappointing to see the company’s revenue guidance for FY25, where it projects a growth of 1-3%. Salil Parekh, CEO of Infosys, attributed this conservative revenue growth guidance to a slowing in demand for digital services and lower spending by customers on discretionary items.
“[The] macro environment is a mixed outlook at this stage as digital and discretionary spends is a bit slow,” he said, adding that in a significant number of large deals, clients are looking to reduce their cost structure.
Infosys recorded large deals worth $17.7 billion for FY24—the highest ever in its history—while it was $4.5 billion for Q4. The IT major expects a certain conversion of these large deals to power its revenue in the current fiscal.
The company reported an operating profit margin (OPM) of 20.1% in Q4 and expects OPM to be in the range of 20-22% in this fiscal.
Difficult times
The quarterly performance of Infosys reveals the challenges plaguing the Indian IT industry.
In US dollar terms, which actually provides a more accurate estimate, the company’s revenue grew 1.9% for FY24 to reach $18.5 billion, highlighting that the IT industry will continue to grow in single digits.
Further, the IT major finished FY24 with 25,994 fewer employees than the previous year. It is the first time in 23 years that the company has seen a fall in headcount in one financial year.
On the subject of generative artificial intelligence (GenAI), Infosys CEO claimed that the company has got excellent traction in the area, and it is engaged with numerous companies to work on large language models (LLMs).
Infosys also announced the acquisition of In-Tech Holding GmbH for $480 million. The Germany-headquartered engineering R&D services provider offers technology solutions largely for the automotive industry and has around 2,200 employees.
Edited by Suman Singh
