Infosys announces mega deal before declaring Q1 FY 2023-24 results

Indian IT services major Infosys has extended its deal with an existing client estimated at $2 billion for over 5 years, the company informed the stock exchanges late on Monday. The IT major noted that the deal would entail digital transformation and AI, automation-led development, modernisation, and maintenance services for the client.

The company informed stock exchanges, “Infosys has entered into framework agreement with one of its existing strategic clients to provide AI and automation-led development, modernization and maintenance services. The total client target spend over 5 years is estimated at USD 2 Bn.”

It is worth noting that the IT services company has not disclosed the client in the above mentioned deal.

The IT major had given a revenue growth guidance of 4-7 per cent in constant terms for FY24, and operating margin guidance of 20-22 per cent.

For the current year, Infosys has announced winning two mega deals. The first deal is worth $1.5 billion with British oil and gas company bp. The second deal is worth $454 million with Danske Bank.

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This development comes days before Infosys’ Q1 FY 2023-24 results. Analysts caution that Infosys is expected to report muted growth during the quarter. 

Phillip Capital expects constant currency revenue growth of 0.8 per cent sequentially on a weaker base of March quarter. Demand uncertainty in BFSI, Telecom, Hitech and Retail will lead to weak start for FY24, the report said.

"Margins are expected to remain flat as efforts from pyramid optimisation, utilisation, and sub con will be offset by likely increase in travel & facility costs. We have not assumed wage hikes for Infosys in Q1. We expect Infosys to retain its guidance,” the report highlighted.

HSBC added to this and said, “Q1 may still see a spill-over from these sub-trends. Overall, FY24 guidance from Infosys is unlikely to change (from 4-7 per cent), though we think the Street may converge around 5 per cent post Q1.”

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