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Informist, Thursday, Oct. 17, 2024

 

--Infosys CEO: Jul-Sept saw strong, broad-based growth 

--CONTEXT: Infosys management comments at post-earnings press conference 

--Infosys CEO: Deepening work in Gen AI, developing multi-agent solutions 

--Infosys CEO: Financial services discretionary spends look strong 

--Infosys CEO: 80 bps impact from margin efficiency program Project Maximus 

--Infosys CEO: Wage hike in phases; on track to hire 15,000-20,000 freshers 

--Infosys CEO: Outlook for Japan, West Asia markets good 

--Infosys CFO: Employee utilisation at all-time high 

--Infosys CEO: Working on various industry apps for small language models 

--Infosys CFO: Tailwinds from Project Maximus will continue 

--Infosys CEO: Having good discussions with clients on small language models 

--Infosys CEO: Large deals pipeline remains robust 

--Infosys CEO: Continue to get large deals related to costs, efficiency 

--Infosys CEO: See more traction in $15-mln order pipeline 

--Infosys CEO: Working with global capability centres to help with hiring 

 

MUMBAI – Discretionary spending by the financial services industry continued to improve in the September quarter, Infosys Ltd. Chief Executive Officer Salil Parekh said in a post-earnings press conference Thursday. However, the discretionary spending by the high-tech, retail, and telecommunication industries, as also the automotive industry in Europe, remains constrained, Parekh said.

 

In the US, within the financial services segment, discretionary spending in capital markets, mortgages, cards and payments continued to see a rise, but discretionary spending has slowed down in the automotive sector in Europe, Parekh said and added that demand remained stable in the company's other verticals "with clients continuing to prioritise cost take-outs over discretionary initiatives". On emerging markets, Parekh said, although "they are still quite small", the company sees good traction in Japan and West Asia but relatively, in terms of size.

Earlier in the day, Infosys reported a consolidated net profit of INR 65.06 billion for the September quarter on revenues of INR 409.86 billion. The company revised its guidance for growth in revenue to 3.75-4.50% in constant currency terms for 2024-25 (Apr-Mar). The company's operating margin was steady at 21.1% in the latest quarter and it said it sees FY25 operating margin at 20-22%. The company is already slightly above the midpoint of the operating margin guidance, and we expect this to increase going ahead in the medium-term, the company's Chief Financial Officer Jayesh Sanghrajka said.

 

On the operating margin front, margin efficiency program Project Maximus contributed 80 basis points, and 10 bps of benefits came from the currency depreciation. This was offset by 30 bps due to amortisation on intangibles as cost of acquisition and 60 bps on account of the salary and "variable increase", Sanghrajka said. Project Maximus has stopped the fall in margin and has helped maintain the margin by offsetting the cost headwinds, he said. The company will have headwinds coming from the wage hikes planned from January, Sanghrajka said and added that the company has decided to roll out wage hikes in two phases, with the first one effective in January and the balance effective in April.

 

The company said its employee utilisation for the September quarter was at an all-time high. The company is on track to hire 15,000 to 20,000 freshers at group level in FY25, Sanghrajka said. The company posted a strong performance this quarter with strong cash generation and large deals, Parekh said. Besides the large deals, a double-digit increase in deals worth less than $15 million in the quarter also contributed to the increase in guidance by the company, Sanghrajka said. The company said the large deals pipeline continues to remain robust.

 

The information technology major said it sees "a huge amount of opportunity" in the generative artificial intelligence space and is building its own small-language model and developing multi-agent solutions for its clients. The company also said it is working closely with global capability centres to help with hiring.

 

On Thursday, shares of the company closed at INR 1,968.10 on the National Stock Exchange, up 2.5% from the previous close.  End

 

Reported by Aman Aryan and Anjana Therese Antony 

Edited by Ashish Shirke

 

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