Shares of Infosys Ltd rose 7% in intraday trade on Friday after India's second-largest IT services provider narrowed its revenue growth guidance to 1.5%-2% for the financial year 2023-24 from 1%-2.5% projected last year. The IT stock gained as much as 7.4% to hit a high of ₹1,605 on the BSE.
Infosys has revised its revenue growth guidance several times over the past year. The IT firm first projected its revenue guidance to be in the range of 4-7% for FY24. On July 20, 2023, Infosys scaled down its guidance between 1% and 3.5% for the ongoing financial year. The company slashed the upped-end of its revenue growth guidance to 2.5% in October last year. The company has now scaled down the upper end of its revenue guidance by 50 basis points to 2%.
The software major reported a 7.3% year-on-year drop in its third-quarter net profit at ₹6,106 crore. Large deal wins during the quarter stood at $3.2 billion, with 71% of this as net new. Operating margin for the quarter was 20.5%.
Shares of Tata Consultancy Services gained 4% in intraday trade today after the third-quarter earnings of India's largest software services company came in line with estimates. The IT firm's stock rose to ₹3,887 on the BSE after the company reported a 2% rise in its net profit at ₹11,058 crore for the quarter ended December 31, 2023.
The IT firm reported deal wins or total contract value (TCV) at $8.1 billion for the third quarter amid a challenging business environment. The company did not win any mega deals in the December quarter. The banking, financial services and insurance (BFSI) portfolio reported de-growth in Q3.
Growth was led by the Energy, Resources and Utilities vertical which grew 11.8%, Manufacturing which grew 7% and Life Sciences and Healthcare which grew 3.1%. The Consumer Business Group (CBG) grew -0.3%, BFSI grew -3%, Communications & Media grew -4.9% and Technology & Services grew -5%.
During the quarter, TCS says it witnessed strong demand for migration, modernisation, and business transformation opportunities on cloud platforms. AI.Cloud led the demand with strong momentum sustaining for Cloud migrations and increasing interest among customers for AI and Generative AI, says the company.
"Our strong performance in a seasonally weak quarter buffeted by macro-economic headwinds, demonstrates the strength of our business model with a well-diversified portfolio and a customer centric strategy. We are seeing strong deal momentum across markets resulting in a solid order book providing visibility into our long-term growth. We are seeing tremendous interest in Generative AI and are leading the innovation and exploratory efforts for our customers in this area," says K Krithivasan, CEO and managing director, TCS. The Bengaluru-based IT company's operating margin improved 50 basis points to 25%.
TCS plans to give 100% variable pay to 70% of its workforce.
