Infosys Shares Rebound After 4% Dip, Raises Guidance

Infosys shares initially fell after missing Q2 earnings estimates but rebounded as the company raised its FY25 revenue growth guidance. The company also added employees for the first time in six quarters and reported strong quarter-on-quarter growth in constant currency.

CONTENTS:

Infosys Shares Rebound After 4% Dip, Raises Guidance Infosys shares fell by up to 4% in early trade on October 18, following a slight miss in its Q2 FY25 earnings. The company’s consolidated net profit rose 2.2% sequentially to ₹6,506 crore, falling short of the ₹6,769 crore estimate by Moneycontrol. Revenue grew 4.2% quarter-on-quarter to ₹40,986 crore, just below the forecast of ₹40,857 crore.

Morgan Stanley had predicted a short-term stock correction due to the earnings miss but suggested that investors could use this dip as a buying opportunity. The firm highlighted strong support for Infosys around its five-year average free-cash-flow multiple of ₹1,780.

Infosys shares briefly dropped to ₹1,889 but quickly rebounded, trading at ₹1,936.85 by 9:24 AM on the NSE. On the NYSE, Infosys ADRs fell 4% before recovering most losses to close 1% lower.

Despite the earnings miss, Infosys raised its FY25 revenue growth guidance to 3.75-4.5% in constant currency, up from the previous 3-4%. This improvement was attributed to stronger Q2 performance and increased volumes. The operating margin guidance for FY25 remained at 20-22%. Analysts, including Nomura and Nuvama, viewed the guidance raise as a sign of recovery in discretionary spending, positioning Infosys to benefit from this trend.

Infosys Shares Rebound After 4% Dip, Raises Guidance During its Q2 FY25 earnings call, Infosys announced the addition of 2,456 employees, reversing a six-quarter hiring decline. The company’s total workforce reached 3,17,788 by the end of September, up from 3,15,332 in the previous quarter when it had reduced headcount by 1,908 employees. Attrition for Q2 stood at 12.9%, slightly higher than the 12.7% in Q1 but lower than the 14.6% recorded in the same quarter last year.

Infosys reported a 4.7% year-on-year increase in net profit, reaching ₹6,506 crore, with revenues growing 5.1% to ₹40,986 crore. CEO Salil Parekh highlighted strong quarter-on-quarter growth of 3.1% in constant currency, driven by broad-based gains in financial services, cloud capabilities through Cobalt, and generative AI via Topaz. He also emphasized the importance of large deals, totaling $2.4 billion in Q2, which demonstrate the company’s market leadership.

The earnings call began with a tribute to Ratan Tata, honoring his legacy with a video and a moment of silence in his memory.