Q1 results impact: Infosys ADRs climb 4% in pre-market session on NYSE; analyst views

Infosys Ltd on Thursday revised upward its revenue guidance for FY25, sending its American Depositary Receipts (ADRs) surging 4 per cent in pre-market session on NYSE. The IT major was trading at $21.33 apiece, up 80 cents or 3.90 per cent over its previous close of $20.53 apiece. The AGR gained after the Bengaluru-based IT firm guided for a constant currency (CC) revenue growth of 3-4 per cent for FY25, up from 1-3 per cent forecast that it suggested at the end of March quarter. Analysts were largely expecting a status quo on guidance. The operating margin guidance is maintained at 20-22 per cent.

Infosys had been trimming its revenue guidance for past few quarters due to challenging macro environment. But on Thursday, its CEO Salil Parekh said his technology firm saw a strong start to FY25 with broad-based growth, operating margin expansion, robust large deals, and highest ever cash generation.

“With our focused approach for generative AI for enterprises working with their data sets on a cloud foundation, we have strong traction with our clients. This is building on our Topaz and Cobalt capabilities” Parekh added.

Prashanth Tapse, Senior VP (Research), Mehta Equities said Infosys results were better-than-expected, beating Street estimates. Infosys, he said, surprised the market with FY25 revenue growth outlook/

"Its looks like Infosys has an excellent start to FY25 with strong and broad-based growth, operating margin expansion, robust large deals, and highest ever cash generation. Overall we believe its looks like the worst is behind Infosys and we may see revival in the IT sector from Q1 earnings looking at TCS and Infosys' performance," Tapse said.

On domestic exchanges, "Infosys technically is demonstrating a positive technical trend. A breakout above Rs 1,733 indicates potential upside targets in the 1825-1850 range, with a recommended stop loss set at Rs 1,720 to mitigate risk.”

The Parekh-led IT firm reported a 7.1 per cent year-on-year (YoY) rise in net profit at Rs 6,368 crore for the June quarter compared with Rs 5,945 crore in the same quarter last year. Revenue for the quarter grew 3.6 per cent YoY at Rs 39,315 crore against Rs 37,933 crore in the corresponding quarter of last year. Analysts were expecting the IT major to report up to 10 per cent rise in net profit on a muted single-digit growth in revenue.

The IT major reported order wins of $4.1 billion which was lower than analyst estimates of $5 billion and also below $4.5 billion it reported for the March quarter.