Infosys, the country’s second-largest IT services company, is set to announce its financial results for the fourth quarter ended March 2023 (Q4 FY23) on Thursday after the market hours. According to analysts, the company is expected to post muted revenue and profit growth for the Q4 FY23 due to weak financial services demand and seasonal factors.
Kotak Institutional Equities in its report said the brokerage expects Infosys to post a muted 0.1 per cent cc revenue growth driven by both cloud and digital programmes and cost take-out agenda of clients. It does not expect material incremental revenue contribution from the Daimler deal. It sees 25 bps sequential decline in Ebit margin with headwinds from visa costs (40 bps) partially offset by operational efficiencies and lower pass-through expense.
The brokerage also said a front-ended growth guidance will give a lot more comfort and even create scope for upgrades. A back-ended growth guidance, meanwhile, may not be viewed favourably.
Kotak also said Infosys has a 26 per cent exposure to BFSI sector.
Another brokerage firm Motilal Oswal said, “Expect muted CC revenue growth of 0.6 per cent QoQ due to seasonality and weakness in Financial Services; USD growth implies 110 BP (basis points) of currency tailwind. There is no material change in large deal momentum compared to last quarter.”
Brokerage firm PhillipCapital expects Infosys’ cc revenue growth of 0.1 per cent on a QoQ basis and 1 per cent in dollar terms. It expects margins to decline marginally QoQ by 10 bps due to a lack of growth leverage and visa costs, which will be offset by easing of supply side pressures.
Asian Market Securities said, “We expect Infosys to end the year at the upper end of its guidance of 16- 16.5 percent C/C growth and margins at the lower end of 21-22.”
“Despite having favourable levers towards margins such as decrease in sub-con costs (as percentage of revenue) and decrease in attrition, pricing and pyramid optimisation among others and the headwinds such as flattish growth, increase in travel levels (not to pre-COVID levels), investment in sales side is expected to be more pronounced this time, thereby leading to flattish to muted growth in margin on QoQ basis,” according to analysts at B&K Securities.
On Wednesday, Tata Consultancy Services (TCS) kickstarted India Inc’s earnings season and reported a 14.8 per cent jump YoY in its net profit to Rs 11,436 crore for the quarter ended March 2023 (Q4 FY23). The revenue from operations of India’s largest IT services company also rose 16.94 per cent to Rs 59,162 crore, compared with Rs 50,591 crore in the year-ago period.
Its board also recommended a final dividend of Rs 24 per equity share of Rs 1 each. TCS’ net profit had stood at Rs 9,959 crore in the corresponding period last year (Q4 FY22).
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