India’s Infosys raises annual sales forecast as IT demand returns

By Sai Ishwarbharath B and Haripriya Suresh

BENGALURU (Reuters) -Infosys topped quarterly results estimates on Thursday as a recovery in demand from clients in its mainstay financial services business helped, prompting India’s second-largest IT services firm to raise its yearly revenue forecast.

U.S.-listed shares of the Bengaluru-based company rose as much as 5.1% as of 1240 GMT.

“We had a very strong first quarter that is specifically focussed on volumes of financial services in the US,” Chief Executive Salil Parekh said at a post-earnings conference.

“Large deals in the quarter also gave us more visibility of what we are seeing for the full year.”

Infosys (NS:) expects revenue growth of 3%-4% in the fiscal year 2025, up from its prior view of 1%-3%.

The company joined industry leader Tata Consultancy Services (NS:) and smaller rival HCLTech in reporting a strong quarter, raising hopes for the $254 billion sector which has been struggling with sluggish demand post a pandemic-induced boom.

“There is a recovery at play after five to six quarters of depressed spending,” Investec analyst Nitin Padmanabhan told Reuters.

Consolidated revenue in the first quarter rose 3.6% to 393.15 billion rupees ($4.70 billion), beating the analysts’ average estimate of 389.15 billion rupees, as per LSEG data.

Its banking and financial services posted a revenue rise of 0.3% after falling for four straight quarters.

IT clients had cut their spending on non-essential projects in recent quarters amid economic uncertainty and higher interest rates. Analysts expect that to change after the US Federal Reserve cuts interest rates and that nation’s election outcome is out.

Net profit at Infosys rose 7.1% to 63.68 billion rupees in the quarter ended June, beating the analysts’ average estimate of 62.53 billion rupees, as per LSEG data.

Operating margin rose 30 basis points year-on-year to 21.1% on better pricing.

Large order bookings – or contract wins above $100 million – came in at $4.1 billion for the quarter, against $4.5 billion in the fourth quarter and $2.3 billion a year ago.

The company also said it plans to hire 15,000-20,000 fresh graduates in the current fiscal year.