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INFO’s 1Q headline print was strong. Revenues grew 3.6% cc QoQ, exceeding expectations (JMFe: 2.1%). EBIT margin expanded 100bps QoQ (JMFe: 50bps). INFO raised its FY25 cc revenue growth guidance to 3-4% (from 1-3%). There were caveats though in all these numbers. Revenue/margin was aided by one-off benefit of 50bps/40bps. Revised guidance includes in-organic contribution (in-tech acquisition) of c.80bps (JMFe). These one-offs aside, we still find a lot of positives in the result. Core volumes grew after three quarters of decline. BFSI returned to sequential growth after six quarters. Management cited evidence of discretionary spend pick-up in BFS. Our TCV-Revenue waterfall model indicates stability in smaller deal revenues. Quality of revenue improved too. Services revenues (ex pass-through) grew 4.5% QoQ. Organic guidance uplift, though modest, seem driven more by management’s conservatism. Guide implies organic CQGR of 0-0.5% through FY25. Sustained deal momentum (Net new TCV up 83% YoY) and uptick in short-cycle deals should drive better growth. We build 5% growth and see high probability of upward revision in the guide. Better momentum flows into FY26/27E estimates driving 2-7% EPS upgrade for FY25-27E. For INFO at least, this seems like the beginning of earnings upgrade cycle. That should drive multiples higher. We now value the stock at 27x EPS (from 23x) – at 1-SD above its past-5 year median. Reiterate BUY with a revised TP of INR 2,010.

* 1QFY25 – better even without one-offs: INFO reported 3.6% cc QoQ growth, ahead of JMFe/Cons. est. of 2.1%/2.3%. Growth was aided by one-off revenues of 50bps from an India based customer. Among verticals, BFSI (7.6% QoQ, USD terms) drove growth. Large deal ramp (likely Liberty Global) helped communication return to growth (1.6%). Hi-tech however though soft (-5%). EBIT margin expanded 100bps to 21.1%, ahead of JMFe: 20.6%. Absence of one-time cost (100bps), one-time revenue (40bps) and Project Maximus-led operational efficiencies (80bps) aided margin. Higher variable pay/leave cost (-120bps) partially offset the benefits. PAT came in at INR 63.7bn, 2% ahead JMFe.

* Guidance – beat and raise: INFO raised its FY25 cc revenue guidance from 1-3% to 3- 4%. Revised guidance includes contribution from in-tech acquisition (JMFe: 80bps). We estimate a CQGR of mere 0-0.5% to achieve FY25 organic growth guidance. This is infact lower than the ask at the beginning of the year (1.1-1.9%). Improved prospects, especially in BFS, and healthy deal wins (USD 4.1bn with net new of 57%) make this guidance conservative, in our view. Company retained its 20-22% EBIT margin guidance. Management still has a few levers to work with – pyramid, near-shoring, realisation – though wage hike and large deal ramps are potential headwinds.

* Raise EPS by 2-7%; Maintain BUY: We build 5% cc revenue growth for FY25, including in-tech. Adverse cross-currency (90bps) however impacts USD revenue growth estimates. We marginally lower our FY25E margin estimate due to earlier than expected in-tech consolidation, limiting FY25E EPS change to 2%. Our FY26-27E EPS however go up by 5- 7%. We raise target multiple from 23x (5-year media) to 27x (+1-SD). Our target price moves up from INR 1,570 to INR 2,010. Maintain BUY.

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