After TCS, another IT major Infosys will release its Q2 financial results on Thursday after the market hours (after 3.30 pm). Analysts expect the company to post single-digit growth in profit as well as revenue.
Brokerage firm Motilal Oswal Financial Services said Infosys is expected to report a muted revenue growth of 0.8 per cent QoQ in CC (constant currency) terms due to continued demand slowdown while the recently signed mega deals may not contribute significantly as of now.
However, Infosy’s deal TCVs (total contract values) should look attractive due to multiple mega wins recently, it said.
Infosys’ Q2 revenue may grow 5.2 per cent YoY in the Indian rupee terms. Profit after tax (PAT) can climb 3.1 per cent YoY. EBITDA margin for the quarter could come at 23.4 per cent against 24.4 per cent in the same quarter last year, according to Motilal Oswal.
“We would be closely monitoring the ramp-up of these wins and the formation of the deal pipeline. We expect the company to maintain its guidance on the back of healthy deal wins, which should provide strong footing in the second half,” said Motilal Oswal.
Another brokerage firm IIFL Securities expects Infosys to post a 1.3 per cent CC QoQ revenue growth, as volumes were subdued and discretionary spend failed to pick up. Its profit may 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.
“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.
Kotak Institutional Securities said it expects $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.
Another brokerage 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.
Kick-starting Q2 earnings season, Tata Consultancy Services (TCS) on Wednesday posted an 8.73 per cent growth in its net profit to Rs 11,342 crore for the September 2023 quarter. Its revenue during July-September 2023 rose 7.92 per cent to Rs 59,692 crore, compared with Rs 55,309 crore a year ago. The company also declared its interim dividend of Rs 9 per share.
