Infosys Q2 results: After TCS, here's what to expect from 2nd largest IT firm

After Tata Consultancy Services Ltd (TCS), it is Infosys Ltd which will report quarterly results today, alongside with HCL Technologies. Shares of this Bengaluru-based IT firm has not performed well, falling 2 per cent this year against an 11 per cent rise in TCS and a 20 per cent jump in HCL Tech, thanks to a downgrading of FY24 guidance in the previous quarter. Can Infosys deliver this time?

Analyst estimates suggest a muted show for the quarter -- a mid single digit growth in top and bottom lines. But deal wins could be strong for the second largest IT major at around $5.5-6 billion, which would be quite higher than the average of $2.4 billion in the last eight quarters.

Any announcement on hike in employee compensation, which have been delayed, would be keenly watched. Also on investor radar would be whether the recent large order wins will lead to lower margins for the Salil Parekh-led IT firm going ahead.

To recall Infosys had cut its constant currency (CC) growth guidance for FY24 to 1-3.5 per cent from 4-7 per cent. Analysts do not see any change in that muted guidance and would like to see whether Q2 CC revenue growth comes in the upper end of the guidance.

For the September quarter, Nirmal Bang sees revenue growth at 1.7 per cent QoQ in CC terms and with no cross-currency impact. This brokerage in fact sees flattish profit at Rs 5,971 crore on 6.5 per cent YoY rise in sales at Rs 38,899 crore. Ebit margin is seen at 21.5 per cent and deal wins in excess of $5 billion. This would be against $2.3 billion in deal wins in the June quarter.

IIFL Securities expects Infosys to report 1.3 per cent CC QoQ revenue growth amid subdued volumes and discretionary spend. It expects Infosys to log profit at Rs 6,375 crore, up 5.9 per cent YoY. Revenue is seen rising 5.5 per cent to Rs 38,564 crore. Ebit margin is seen at 21 per cent.

Emkay Global, on the other hand, sees profit rising 4.1 per cent YoY to Rs 6,267 crore on 5.4 per cent rise in revenue at Rs 38,517 crore. Investors, Emkay Global said, should look at the management commentary of wage hike effective date; flow of smaller deals and discretionary spending. Meanwhile, HDFC Institutional Equities estimated a profit growth of 2.7 per cent YoY and sales growth of 5.4 per cent.

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