Infosys share price in focus as ADR jumps over 8% after Q1 results beat estimates

Infosys share price is expected to rise on Friday after its US-listed shares witnessed a sharp rally overnight after the announcement of its Q1 results. Infosys American depository receipts (ADRs) rallied over 8% on the New York Stock Exchange (NYSE) Thursday, its biggest single-day jump in four years after the IT services major beat its revenue estimates for the first quarter of FY25.

Infosys ADRs ended 8.38% at $22.50 during the normal trading hours on NYSE. It gained 0.22% in the after market hours trade and closed at $22.30.

The second largest IT services company in India, Infosys reported a consolidated net profit of ₹6,368 crore in the quarter ending June 30, 2024, registering a growth of 7.1% compared to ₹5,945 crore in the same period last year. However, the company’s bottom line declined 20.1% quarter-on-quarter (QoQ), primarily due to a tax refund boost in the previous quarter.

Infosys Q1FY25 revenue from operations increased 3.7% to ₹39,315 crore from ₹37,923 crore, QoQ. Infosys dollar revenue was at $4,714 million for the quarter, a 2.1% increase from $4,617 million in Q1FY24 and a 3.3% rise from $4,564 million in Q4FY24.

At the operational level, earnings before interest and taxes (EBIT) rose 8.8% to ₹8,288 crore, while EBIT margin improved by 100 bps QoQ to 21.7%.

Infosys raised its revenue growth guidance for FY25, while retaining its margin guidance. The IT major anticipates a constant currency revenue growth of 3% - 4% in FY25 as compared with 1-3% estimated earlier and also projected an operating margin ranging from 20% to 22% for the current financial year.

Commenting on Infosys Q1 results, Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd said Infosys reported better than expected earnings and beating street estimates and also surprised with FY25 revenue growth outlook raised.

Overall, he believes it looks like the worst is behind us and we may see revival in the IT sector from Q1 earnings looking at TCS and Infosys performance.

“Technically, Infosys stock is demonstrating a positive technical trend. A breakout above ₹1,733 indicates potential upside targets in the ₹1,825 - 1,850 range, with a recommended stop loss set at ₹1,720 to mitigate risk,” Tapse said.

On Thursday, Infosys share price ended 1.93% higher at ₹1,759.15 apiece on the BSE.

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