Infosys Q4 results preview: Infosys Ltd will be the second Tier I IT firm after Tata Consultancy Services Ltd (TCS) to announce its earnings for the March quarter. Analysts tracking the IT firm largely expect Infosys to report nil growth in profit against TCS' 9 per cent growth, 3-4 per cent year-on-year (YoY) growth in sales against TCS' 3.5 per cent growth and a marginal fall in margin against a rise for TCS. Here are five things investors would be keenly following today:
Infosys FY25 guidance
Analysts are largely expecting Infosys to guide for 2-5 per cent growth in sales in constant currency (CC) terms against a revised FY24 guidance of 1.5-2 per cent. They see positive demand commentary vis-à-vis FY24. They expect Infosys' margin guidance to be similar to FY24's guidance of 20-22 per cent EBIT margin. Kotak expects FY2025E revenue growth guidance to be in the range of 2-5 per cent. It expects Infosys to raise EBIT margin guidance band to 20.5-22.5 per cent from 20-22 per cent in FY2024.
Infosys management commentary
Analysts said commentary on clients' budget for 2024, spending outlook, commentary on stressed verticals and impact of mega deals on margin in the near term will be keenly followed.
"We expect investor focus on—(1) translation of mega-deals into revenues, (2) deal pipeline, (3) outlook in BFSI and manufacturing verticals, (4) discretionary spending environment, especially in impacted verticals, (5) reasons for high senior management attrition and steps taken to backfill the same and (6) revised payout policy (earlier payout policy was for 5-year period over FY2020-24)," Kotak said.
Infosys deal wins in Q4
Against $3.2 billion deal wins in the December quarter, Nirmal Bang expects Infosys deal wins to be in the range of $2-3 billion, Nirmal Bang said. Total contract value (TCV) stood at $7.7 billion in the June quarter, analysts noted.
"We expect large deal TCV of $3 billion. In focus will be translation of revenues of large deals signed in earlier quarters into revenues," Kotak said.
Infosys Q4 Ebit margin, CC growth
Infosys margins are seen falling sequentially due to wage revision and a lack of leverage from growth. Sharekhan sees flattish EBIT margin for the quarter. Margin headwinds due to wage hike (1-month impact) may be offset by the one-off impact from McCamish system Cyber incident as it reverses in Q4FY24, it said.
On sequential CC revenue growth, it said Infosys may report a decline of 0.5 per cent in constant currency (CC) revenue due to weakness in discretionary spends and lower contribution from large deals.
Infosys divdend announcement
Infosys has announced Rs 18 per share dividend for FY24 so far. All eyes would be on the quantum of dividend that it announces. For FY23, Infosys announced Rs 34 per share dividend, amounting Rs 6,844.20 crore. Infosys has a policy of returning approximately 85 per cent of the free cash flow (FCF) cumulatively through a combination of semi-annual dividends and/or share buyback and/or special dividends, subject to laws and requisite approvals.