India’s second-largest information technology (IT) company, Infosys, is expected to post muted revenue and profit growth for the quarter ended March on weak financial services demand and seasonal factors, as per analysts.
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New Delhi: India’s second-largest information technology (IT) company, Infosys, is expected to post muted revenue and profit growth for the quarter ended March on weak financial services demand and seasonal factors, as per analysts.
The Bengaluru-based tech giant will announce its earnings for the quarter ended March 2023 (Q4 FY23) today. According to a Moneycontrol report that quoted analysts, Infosys is expected to see revenue in the fourth quarter of FY 2023 rise 1.4 per cent and net profit increase 0.6 per cent quarter-on-quarter (QoQ).
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The consolidated revenue is expected to come in at Rs 38,859 crore, marking 20.4 per cent year-on-year (YoY) growth, according to an analysts’ poll mentioned by Moneycontrol and the consolidated net profit is expected to increase 16.5 per cent YoY to Rs 6,623 crore. In constant currency (CC) terms, analysts predict revenue growth ranging from 0.3 to 0.6 percent QoQ.
Like other IT companies, Infosys also depends on banking, financial services and insurance (BFSI) companies for most of its revenue. The IT behemoth also felt the impact of a potential banking crisis that led to the collapse of Santa Clara, California-based Silicon Valley Bank and the rescue of Credit Suisse by UBS in March.
As per Kotak Institutional Equities, Infosys, specifically, has a 26 per cent exposure to the banking and financial services sector, excluding insurance.
“Expect muted CC revenue growth of 0.6 percent QoQ due to seasonality and weakness in Financial Services; USD growth implies 110BP of currency tailwind. There is no material change in large deal momentum compared to last quarter,” securities firm Motilal Oswal wrote.
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As per Asian Market Securities, Infosys is expected to end the year at the upper end of its guidance of 16- 16.5 per cent C/C growth and margins at the lower end of 21-22.
According to the analyst poll, Earnings Before Interest and Tax (EBIT) are expected to come in at Rs 8,395 crore, with the margin projected to expand by 78 bps to 21.6 per cent.
As per IDBI Capital, the EBIT margin to expand by 83 bps QoQ to 22.3 per cent, helped by reduced attrition.
“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.
