Infosys Q2 results at 3.45 pm tomorrow. Key things to watch

Infosys is all set to announce its September quarter results on Thursday. The second largest IT firm is seen reporting a 2-6 per cent year-on-year (YoY) rise in profit on a 5-6 per cent rise in sales. Revenue growth in constant currency (CC) terms is seen at around 0.80-1.3 per cent sequentially in constant currency (CC) terms, which is seen lower than 1.6-22 per cent QoQ growth forecasts for TCS and HCL Technologies. Margin may expand modestly on a sequential basis.

After disappointing the Street on guidance front last quarter, expectations are Infosys will retain its FY24 CC revenue growth guidance of 1-3.5 per cent and Ebit margin guidance of 20-22 per cent. All eyes would be on ramp up times lines for recently announced large order wins and the management commentary on competitive intensity, margin impact from mega deals and capital allocation, analysts said. 

IIFL Securities said Infosys may log 1.3 per cent CC QoQ revenue growth, as volumes were subdued and discretionary spend failed to pick up.

"Deal momentum further accelerated, given announcements of mega deals during the quarter. We expect margins to expand 20 bps QoQ, as wage hikes have been delayed, potentially to Q3. Infosys should maintain FY24 guidance of 1-3.5 per cent CC YoY revenue growth and 20-22 per cent Ebit margin," the domestic brokerage said.

IIFL expects profit to rise 5.9 per cent YoY to Rs 6,375 crore on 5.5 per cent rise in sales at Rs 38,564 crore. Ebit margin is seen at 21 per cent. Emkay Global sees profit rising 4.1 per cent YoY to Rs 6,267 crore on 5.4 per cent rise in sales at Rs 38,517 crore. Investors, it said, would eye commentary of wage hike effective date; flow of smaller deals and discretionary spending and possibility of growth uptick in H2FY24. HDFC Institutional Equities sees profit growth at 2.7 per cent YoY and sales growth at 5.4 per cent.

Kotak has anticipated $5.5-6 billion in total contract value (TCV) from Infosys, which would be higher than the last 8-quarter average of $2.4 billion.

"We believe deal flow has steadied after the transition from discretionary spending-powered short-tenured programs to larger programs fuelled by cost take-outs, which have longer sales cycles. We expect the continuation of cost take-out deals in CY2024 along with an improvement in discretionary spending," it said.

The IT firm will report its Q2 results at 3.45 pm. It will hold a press conference at 4.30 pm and conference call at 6 pm.

 

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