New Delhi, Oct 23 (PTI) IT company Infosys on Friday reported a 6.2 per cent rise in consolidated net profit to Rs 7,823 crore for the second quarter ended September 30, driven by an increasing share of AI-led projects in its revenue mix.
The company registered a net profit of Rs 7,364 crore a year ago, according to a regulatory filing.
It reported a stable margin of 21 per cent year-over-year but reduced revenue guidance for the rest of the year in 1-2 per cent range from 1.5 to 3 per cent projected earlier, mainly due to pricing pressure.
Infosys consolidated revenue from operations grew 10.2 per cent to Rs 49,244 crore in the reported quarter from Rs 44,490 crore in the year-ago period.
Infosys CEO and MD Salil Parekh said the company bagged large contracts of USD 5.2 billion (about Rs 49,000 crore), including a mega deal of over USD 2 billion (about Rs 19,000 crore) for 7 years.
“This deal (USD 2 billion) is expected to contribute to over 1 per cent revenue growth in the coming financial year. Our AI revenue was 10.5 per cent and grew 29 per cent quarter-on-quarter. As enterprises move to AI adoption at scale, the strong growth in AI revenues is a recognition of our differentiated market positioning and client confidence,” he said.
Parekh said cybersecurity is a large opportunity for Infosys, and it is helping some clients build protection using frontier AI models.
The company’s operating margin was stable at 21 per cent year-on-year.
“Based on our Q2 performance and revised outlook for the rest of the year, our revenue growth guidance is 1 per cent to 2 per cent year-over-year in constant currency terms. Operating margin guidance remains at 20 per cent to 22 per cent for the year,” Parekh said.
Infosys recorded a 4,000 rise in headcount.
“We have 8,000 college graduates we hired in the quarter. For the full year, the target remains clear at approximately 20,000 like last year. We have already done more than half in the first half of the year. So, we think this dynamic will continue in the way we scale,” Parekh said.
Infosys revenue in North America declined 1.6 per cent and India business dipped 10.5 per cent while it reported 3.9 per cent growth in Europe and 15.1 per cent rise in the rest of the world.
The company recorded 32.5 per cent growth in the life sciences vertical, 7.4 per cent in energy, utilities, resources and services, 4.4 per cent in communication, and 2.3 per cent in the financial services segment.
Infosys recorded a 17.5 per cent decline in the hi-tech segment, and a 1.4 per cent drop in the manufacturing vertical.
“If you look at our guidance, our current guidance, our last guidance was 1.5 per cent to 3 per cent. We have clearly called out at 1.5 per cent. We expect even more uncertainty.
“Our Q2 has been softer, and our volume continues to remain softer. We have also seen rising pressure on the back of competitive intensity and a higher ask on productivity. All that is baked into our revised guidance as we look forward,” Infosys CFO Jayesh Sanghrajka said.
He said softness is expected in sectors such as retail and high-tech.
“In the next half, we will have an impact coming from compensation. That will have a headwind. We will see continued intensity on pricing, so we will see that as a headwind. We will continue working on Project Maximus to offset as much as possible from that,” Sanghrajka said.
Mirae Asset Sharekhan, research analyst, Manav Medewala said Infosys lowered its FY27 revenue growth guidance to 1-2 per cent from 1.5-3 per cent is a sharper cut than anticipated growth.
“Intense pricing pressure and rising client expectations around productivity gains remain key challenges, raising concerns that AI-led efficiencies could also weigh on traditional revenue growth,” he added.
Talking about headcount, Sanghrajka said the company has around 13 per cent or roughly 45,000 people who need to be backfilled either laterally or with freshers.
“We are working at 85 per cent utilisation…Fresher typically takes six to eight months by the time we train them and deploy them to the project, so we do have to plan ahead of the time to make that, which is getting reflected in net headcount increase,” he added.
On the impact on employee cost due to changes in US rules, Parekh said the majority of employees in the US have been hired locally, and it will increase over a period of time.
Sanghrajka said the company delivered operating margins of 21 per cent in the second quarter amid heightened volatility.
“Focus on cost and operational efficiency measures while making the required investments has led to stable margins. Free cash flow of USD 928 million, representing 113.3 per cent of net profit, underscores the financial strength of the business.
“The Board has announced an interim dividend of Rs 26 per share, an increase of 13 per cent from last year,” Sanghrajka said. PTI PRS PRS
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