 "Infosys Q4FY24 result preview: Low single-digit topline growth expected")
IT major Infosys is expected to register lower single-digit growth in revenues for the January-March quarter of the financial year 2023-24 (Q4FY24) as compared to the same quarter in previous year. This comes on the back of weakness in discretionary spends and lower contribution from large deals, analysts said.
According to brokerages, Infosys is likely to report a revenue increase of 2-4 per cent year-on-year (YoY) between Rs 38,945 crore to Rs 38,432 crore.
The IT major Infosys is expected to report a net profit in the range of Rs 6,102 crore to Rs 6,442 crore for the fourth quarter, against Rs 6,128 crore in Q4FY23. Brokerage firms expect net profits of IT company Infosys in the range of - 0.4 per cent to 5 per cent YoY for Q4FY24.
Analysts said that the full impact of wage hikes should hit in Q4FY24 earnings of Infosys, though it may get offset by cost cuts. Last year in December, Indian IT company Infosys announced long awaited wage hikes for its employees.
Key monitorables: The street will watch out for Infosys' performance in impacted verticals such as BFSI, retail, hi-tech and telecom with FY25 revenue growth and margin outlook. The analysts will also factor the risk of macro headwinds on demand and the company’s commentary on core markets such as the US and Europe.
Nomura: The brokerage expects constant currency (CC) decline of 1 per cent quarter on quarter (QoQ) in Infosys Q4FY24 results due to continued weakness in discretionary spends and weak seasonality for Infosys.
Nomura estimates earnings before interest and tax (EBIT) margins for Infosys to be flat QoQ as there will be one month impact of salary hikes. The company will also have visa costs in quarter four, which will be compensated from non-occurrence of one-time costs of the third quarter.
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On a full year basis, the revised revenue growth guidance for FY24 is 1.5-2 per cent YoY with a 20-22 per cent EBIT margin, analysts wrote.
For the coming financial year, the brokerage expects IT company Infosys to guide for 2-5 per cent YoY revenue growth in CC terms with a 20-22 per cent EBIT margin band.
HSBC: The investment bank estimates that the full impact of wage hike will hit in the fourth quarter for Infosys, while it may get offset by cost cuts. It expects 0.2 per cent decline in revenue QoQ in CC terms. Margins should expand by 80 basis points QoQ.
According to analysts at HSBC, Infosys FY25 revenue guidance is likely to be in the range of 3-5 per cent. Large-deal ramp-up outlook in the first quarter of FY25 will be critical for full year growth trends, they said.
BNP Paribas: It estimates Infosys Q4FY24 revenue to decline 0.4 per cent QoQ due to the continued impact of a slowdown in discretionary tech spending, some extension of furloughs, and project ramp downs; partially offset by large deals ramp-up.
Analysts at BNP Paribas predict a 25 basis QoQ decline in EBIT margin to 20.3 per cent on account of muted revenue growth, one month of wage-hike impact and visa costs.
However, they expect Infosys to guide 3-5 per cent YoY revenue growth in CC terms in FY25 with a margin band of 20-22 per cent.
Axis Securities: It forecasts revenue to improve marginally by 0.3 per cent QoQ on the backdrop of delayed decision-making and deeper furloughs
Margins are likely to expand slightly because of lower onsite expenses. Key monitorables for the brokerage include the impact on the BFSI vertical post the banking crisis and commentary on other verticals.
ShareKhan: According to the brokerage Infosys will report a revenue decline of 0.5 per cent in CC terms due to weakness in discretionary spends and lower contribution from large deals.
The firm expects EBIT margins to be flat due to wage hike. ShareKhan has given a 'Buy' call for Infosys with a target price of Rs 1,850.