Infosys Q2 preview: Profit may rise 10-12%; Rs 8,000-10,000 cr share buyback likely

Bengaluru-headquartered Infosys is likely to report a 10-12 per cent year-on-year (YoY) rise in net profit for the September quarter on a 20 per cent-plus growth in sales. The margin for the IT major is expected to expand 60-75 basis points sequentially. All eyes would be on the board meet on share buyback. Analysts largely expect Infosys management to maintain its FY23 constant currency (CC) revenue guidance at 14-16 per cent.

Axis Securities expects Infosys to report a 10.8 per cent YoY rise in profit after tax (PAT) at Rs 6,008 crore compared with Rs 5,421 crore in the same quarter last year. It sees sales for the Bengaluru-based firm to rise 23.4 per cent YoY to Rs 36,520 crore from Rs 29,600 crore in the corresponding quarter last year.

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Emkay Global sees a similar profit figure for Infosys at Rs 6,010.80 crore. It sees Infosys sales print at Rs 36,527 crore. Ebitda margin for the IT major may rise 75 basis points QoQ to 23.6 per cent from 22.8 per cent in June quarter, the brokerage said.

Margins are likely to expand aided by higher off shoring and favourable currency mix, Axis Securities said while expecting Ebitda margin to expand 63 basis points to 23.4 per cent from 22.8 per cent sequentially.

"We expect Infosys to report revenue growth of 5.9 per cent QoQ and believe the management to retain the company’s revenue growth guidance for FY23E at 14-16 per cent(in CC terms). Moreover, the company’s margins are likely to improve by 63 bps QoQ, aided by a favourable currency mix and strong volume growth," Axis Securities said.

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Share buyback

The company had on October 10 informed stock exchanges about the board meeting regarding a proposal for buyback of equity shares. YES Securities expects Infosys to announce cash buyback of around Rs 8,000 crore to Rs 10,000 crore.

As revenue growth outlook has moderated as clients have become cautious, this buyback would make better use of surplus cash lying on books, it said.

"It should limit downside for Infosys stock in the near term. The buyback price is expected to be at significant premium to current market price. In the current economic environment, it appears to be  the efficient utilisation of cash reserves to boost shareholder return,” YES Securities said.

The scrip closed at Rs 1,428.85 on BSE, up 0.35 per cent, on October 12, 2022.

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