Infosys cuts FY24 revenue expectations in another bleak outlook for IT sector
Infosys lowered the revenue growth guidance for FY24 to 1-3.5% from the earlier projection of 4-7%, dampening the sentiment for both the company and the industry.
Infosys, India’s second-largest IT services exporter, reported a 10.9% rise in net profit for the first quarter i.e., April-June 2023 period. However, the company said its revenues for the current fiscal will grow in the range of 1-3.5% lower than its earlier guidance of 4-7%.
reported a net profit of Rs 5,945 crore for the first quarter. During the same period, the revenue came in at Rs 37,933 crore, a year-on-year (YoY) growth of 10%. On a sequential basis, that is compared to the quarter of January-March period, both the revenue and net profit were up by 1.3% and 3%, respectively.
However, the first quarter performance of Infosys also presents challenges. A lower revenue guidance figure reveals the challenges faced by the company and the Indian IT services industry as a whole.
On the revised lower revenue guidance, Infosys CEO Salil Parekh said, “Some clients stopped doing the transformative work where the deals were delayed and the large deals signing (sic) has shifted to the later part of the financial year.”
The CEO further said certain business segments like BFSI, telecom, and hitech showed lower revenue traction during the quarter and this is likely to persist for some more time.
The performance of Infosys for the first quarter was almost similar to its peers like Tata Consultancy Services (TCS), Wipro, and HCLTech. The company, which is also regarded as the bellwether for the industry, has given out a grim reminder of what is in store for the sector this financial year.
The tepid performance was reflected in its overall headcount for the first quarter, which was down 6,940 people. The total headcount at the end of the first quarter stood at 3,36,294 as compared to 3,43,234 in the fourth quarter of FY23.
Infosys said it reached a total contract value of $2.3 billion in the first quarter. It recently announced that it had bagged a $2 billion deal from one of its existing clients.
The operating profit margin of the company for the first quarter came in at 20.8% and Infosys has guided to 20-22% operating profit margin for the fiscal.
“We have expanded the margin improvement program with a holistic set of actions for the short, medium and long-term, working on five key areas, supported by our leadership team,” Parekh added.
Infosys remained non-committal on wage hikes for the employees which is generally rolled out during the first week of July and only mentioned that the salary revisions were under active consideration.
(The headline was updated)
Edited by Akanksha Sarma
