Shares of Infosys soared to the top of the pack of index gainers, rising by 5 percent in early trade on July 19 to hit a 52-week high, after the company beat analyst expectations of Q1 earnings and raised revenue growth guidance, signaling signs of recovery.
At 09.16 am, shares of Infosys were trading at Rs 1,814 on the NSE. Overnight, ADRs of Infosys, listed on the New York Stock Exchange (NYSE) also skyrocketed over 8 percent to settle at $22.25 after the company released its June quarter results.
Earnings Highlight
Infosys' revenue from operations rose 3.7 percent quarter-on-quarter in April-June to Rs 39,315 crore. However, its consolidated net profit fell around 20 percent sequentially to Rs 6,368 crore in Q1 FY25, largely due to a high base in the previous quarter from a tax refund boost. Despite that, the bottom line as well as the topline came in above the Street's estimates. A poll of 10 brokerages had estimated Infosys' Q1 net profit at Rs 6,248 crore and revenue at Rs 38,850 crore.
In addition to the better-than-expected numbers, the IT services major gave investors another reason to cheer as it raised revenue growth guidance to 3-4 percent for the current fiscal. The company had previously guided for a 1-3 percent revenue growth in FY25 and analysts had expected the IT services major to stand pat on that.
Brokerage View
This move also gave signs of the company seeing green shoots of recovery. Brokerage firm Nuvama Institutional Equities highlighted the management's upbeat stance, adding that it anticipates a recovery in the US BFSI vertical for Infosys and a stronger H1 than H2.
On the contrary, Motilal Oswal Financial Services believes the FY25 revenue growth guidance upgrade was largely driven by a one-time India business spike and inorganic impact. However, it does feel that strong deal wins should improve the company's medium-term growth outlook.
"Infosys has maintained its margin guidance but continues to see upside potential in the medium term, which we see as encouraging," MOFSL stated.
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