**Infosys Boosts Full-Year Guidance Amid Modest Revenue Growth**
Infosys, the Bengaluru-based IT services giant, has raised its full-year revenue guidance following a modest sequential growth in revenue. This optimism mirrors sentiments expressed by larger competitors Tata Consultancy Services (TCS) and HCL Technologies regarding future demand. During a post-earnings press conference on Wednesday, CEO Salil Parekh highlighted a strong pipeline of large deals and increasing demand from clients in the financial services and energy sectors, driven by AI initiatives.
In the October-December quarter, Infosys reported revenues of $5.1 billion, surpassing the $5 billion forecast from a Bloomberg poll of 36 analysts. This figure represents a 0.45% increase sequentially and a 3.24% rise year-over-year, with most growth attributed to healthcare clients, which account for less than 10% of the company’s total revenue.
Despite this growth, Infosys experienced the slowest revenue increase among its peers, with TCS and HCLTech reporting sequential growth rates of 0.58% and 4.09%, respectively. Profitability, however, took a hit, as operating margins fell by 260 basis points to 18.4%, largely due to new labor codes introduced by the government, which resulted in an upfront cost of $143 million for Infosys. Excluding the impact of these labor codes, the company’s operating margins would have expanded by 20 basis points to 21.2%. TCS and HCLTech also faced additional costs due to the labor codes, with TCS’s margins remaining unchanged at 25.2% and HCLTech’s margins increasing to 18.6%.
Infosys’s net profit for the quarter was $747 million, reflecting a 10.97% sequential decline and a 7.1% year-over-year decrease, falling short of the Bloomberg estimate of $818.7 million. The company must report a revenue decline in the fourth quarter to miss last year’s total revenue of $19.28 billion.
Despite the challenges, some analysts view the results positively. Amit Chandra, vice-president of HDFC Securities, noted that the top-line revenue exceeded expectations and anticipates accelerated growth driven by demand from banking, financial services, insurance (BFSI), retail, and manufacturing sectors, particularly in AI-led projects. Following the earnings report, Infosys shares rose by 2.45% to $17.95 in pre-market trading on the New York Stock Exchange.
Looking ahead, Parekh expressed cautious optimism, stating that there are no signs of deterioration in demand, indicating a potentially positive outlook for the company.
**FAQ**
**What factors contributed to Infosys’s revenue growth?**
Infosys’s revenue growth was primarily driven by increased demand from healthcare clients and a strong pipeline of large deals, particularly in the financial services and energy sectors, supported by AI initiatives.
