NEW DELHI: is likely to report a flat-to-negative sequential growth in March quarter profit on a 2-4 per cent quarter-on-quarter (QoQ) rise in sales. Sequentially, growth in dollar revenues and in constant currency (CC) terms is likely to be in 3-5 per cent range.
The IT major is seen logging a marginal fall in Ebit margin sequentially due to wage hikes, higher travel & facility cost partially offset by automation and offshoring.
On a YoY basis, profit growth is seen around 15-22 per cent for the quarter on a 12-14 per cent rise in sales. To be sure, the fourth quarter is usually a seasonally weak one for Infosys. The firm will declare its quarterly results on April 14, Wednesday, and also consider a share buyback proposal.
Analysts largely expect the Bengaluru-based technology firm to guide for FY22 constant currency revenue growth of 12-15 per cent and an Ebit margin guidance of 22-25 per cent.
Emkay Global said that the absence of mega deals would lead to lower deal value sequentially for Infosys, but said the ramp-up of large deals was progressing on expected lines and deal closures were also returning to a normal level as clients become comfortable with virtual mode discussions and negotiations.
It expects Infosys to guide for 12-15 per cent growth in constant currency revenue for FY22 and defend its FY21 margins by guiding 22-24 per cent Ebit margin for the same.
In rupee terms, Kotak expects 2.1 per cent QoQ drop (up 17.9 per cent YoY) in net profit at Rs 5,094.70 crore from Rs 5,202 crore in December quarter. It sees revenues rising 2.3 per cent to Rs 26,530 crore from Rs 25,927 crore QoQ. Revenue growth in CC terms is seen at 3 per cent QoQ, while Ebit margin is seen falling 115 basis points sequentially largely on the back of wage revision and lower utilization rate.
The IT firm reported a utilization rate of 86 per cent in the December quarter, which analysts said was unstable.
“We expect a large deal TCV of $3 billion, down from $7.1 billion announced for the December quarter. We expect investor focus on deal structure, revenues and profitability dynamics of the Daimler deal, the composition of guidance, i.e. whether it is front-ended or back-ended; outcome of the annual budgeting cycle and its implications for Infosys, the company’s view on IT spending trend, among others,” Kotak said.
TCV stands for total contract value.
ICICI Direct expects Infosys to report 4.5 per cent QoQ increase in revenues in constant currency terms mainly led by traction in cloud migration, ramp up of deal wins and Vanguard deal.
“The company is witnessing a healthy deal pipeline led by lift and shift deals, acceleration in digital technologies and cost take out deals. With cross currency tailwind, we expect dollar revenues to increase 5.3 per cent QoQ. However, we expect margins to decline 132 basis points QoQ. PAT is expected to increase 22 per cent YoY due to low base and savings in travel & facility cost,” it said.
Investors would be keenly following FY22 revenue and margin guidance, the commentary on client budgets, second wage hike, ramp up of Daimler deal, traction in digital technologies and pricing environment, analysts said.
