Infosys ADR slumps 3% on Q4 miss, softer FY25 guidance

Infosys' American Depository Receipts (ADRs) fell 3% to $16.5 on the New York Stock Exchange (NYSE) on Thursday after the company missed revenue estimates and offered softer guidance. The sharp drop is the lowest since July 20.

The IT major's profit jumped 30% YoY to Rs 7,969 crore, while the revenues were up just 1% (YoY) at Rs 37,923 crore. In constant currency (CC) terms, revenues declined 2.2% quarter-on-quarter (QoQ).

Infosys has provided lower-than-expected guidance for FY25 at 1-3% against analyst estimates of 2-5% in CC terms with operating margin guidance at 20-22%.


"Infosys weak quarterly numbers, lower-than-expected guidance for FY25 and declining headcount reflects continuity in weak, with the only silver lining being strong large deal TCV in Q4 and record $17.7 billion in FY24," said Sanjeev Hota, Head of Research, Sharekhan by BNP Paribas.

The company clocked a deal value of $4.5 billion in the January-March period, with 44% of it being net new ones. FY24 deal value was the highest ever at $17.7 billion, which the company says will create a robust foundation for growth.
"We delivered the highest ever large deal value in the financial year 2024. This reflects the strong trust clients have in us. Our capabilities in Generative AI continue to expand," said Salil Parekh, CEO and MD, Infosys.

The company said it is working on client programs, leveraging large language models with impact across software engineering, process optimization, and customer support.

Analysts expected revenue to be around Rs 38,624 crore, as per LSEG data. Segment-wise, revenue from the financial services segment degrew 8.5% in CC terms, while retail growth too suffered at -3.7%. The CC revenues from hi-tech and manufacturing verticals grew the most at 9.7% and 8.7%, respectively in the March quarter.

The company generated a free cash flow of $848 million in the fourth quarter, which was the highest in 11 quarters driven by its relentless focus to improve the working capital cycle.

Consistent to give high and predictable returns to shareholders, the Board has approved the capital allocation policy under which the company expects to return 85% over the next 5 years and progressively increase an annual dividend per share”,

Infosys maintained that operating margin expansion in the medium-term and improving cash generation continues to remain its priorities.

Voluntary attrition further declined to 12.6% at the end of the March quarter, from 12.9% in the December quarter and 20.9% in the year-ago quarter.

"We believe the company is well positioned to capture cost optimization and transformation programs given its strong domain capabilities and strong execution," Hota noted.