India’s second largest IT company Infosys is expected to report a double-digit growth in revenue for the fiscal fourth quarter, with estimates going as high as nearly 21.2 per cent, driven by both cloud/digital programs and cost take-out agenda of clients. According to a CNBCTV18 poll, Infosys will report revenue of Rs 38,830 crore for the fourth quarter ended March 2023, as against Rs 38,318 crore in the previous quarter. Infosys will announce its March quarter results on April 12 at around 3:45 pm, followed by a press conference.
According to analysts and brokerage firms, the IT firm is expected to clock a profit rise in the range of 14.2- 21.7 per cent on-year during the March quarter. EBIT margin is expected to expand for the IT firm, albeit marginally. “We expect Infosys to achieve its guided revenue growth of 16-16.5 per cent for FY23 while for FY24 we expect the company to guide for mid to high single digit revenue growth in CC terms,” said ICICI Securities.
Brokerage Estimates for Infosys Q4 FY23 financial results (on-year comparisons):
ICICI SecuritiesRevenue: Rs 38,899.8 crore; up 20.5%EBITDA: Rs 9,398.0 crore; up 19.8%PAT: Rs 6,577.9 core; up 15.7%
Axis SecuritiesRevenue: Rs 38,823 crore; up 20.3%EBITDA: Rs 8,698 crore; up 25.0%PAT: Rs 6,920 crore; up 21.7%
BOBCAPSRevenue: Rs 3,91,171 million; up 21.2%EBIT: 83,515 million; up 19.8%PAT: 66,108 million; up 16.3%
HDFC SecuritiesNet sales: Rs 389.30 billion; up 20.6%EBIT: Rs 84.91 billion; up 22.1%APAT: Rs 65.33 billion; up 14.9%
Kotak Institutional EquitiesNet sales: Rs 386,932 million; up 19.9%EBITDA: Rs 93,597 million; up 19.3%PBT: Rs 87,355 million; up 15.8%
SharekhanSales: Rs 38,598 crore; up 19.6%OPM: 23.9%Net profit: Rs 6,494 crore; up 14.2%
Elara CapitalNet sales: Rs 3,96,029 million; up 23%EBITDA: Rs 97,032 million; up 24%Recurring PAT: Rs 67,526 million; up 19%
Weak season to weigh on Infosys sequential growth
Sequentially, ICICI Securities expects Infosys to post soft revenue growth at 0.1 per cent QoQ CC as “Q4 is a seasonally weak quarter due to fewer working days as well as some furlough impact in January”. “We expect 100 bps cross currency tailwinds due to GBP and EUR appreciation against US$, resulting in US$ growth of 1.5 per cent QoQ. We expect rupee revenues to increase 1.5 per cent QoQ,” it said. The company delivered 21.5 per cent margins in YTDFY23. “Headwinds for margins are visa costs (annual booking in Q4), fewer working days, lower benefit of rupee dollar movement as well as some impact of seasonal weakness and furloughs, etc,” the brokerage firm added.
Growth is also expected to taper due to the Daimler deal coming into the base (2HFY22). “March is a seasonally weak quarter for the company. We do not expect material incremental revenue contribution from the Daimler deal. We expect a 25 bps sequential decline in EBIT margin with headwinds from visa costs (40 bps) partially offset by operational efficiencies and lower passthrough expense,” said Kotak Institutional Equities.
What to watch from Infosys Q4 FY23 financial results
While Infosys remained a preferred choice for brokerage firms and analysts, what will be the key things to look out for as Infosys announces its quarter results? Kotak Institutional Equities said, “We expect investor focus on: 1) revenue growth guidance and whether growth will be back-ended, 2) outcome of clients budgeting cycle, priorities of investments and increase/ decrease in spending, 3) positioning in vendor consolidation and cost take out opportunities, 4) health of impacted verticals such as hi-tech, retail, parts of financial services and Europe, 5) strength of deal pipeline and pace of closures, 6) re-allocation of responsibilities and portfolios of Mohit Joshi, 7) measures to improve margins, and 8) impact of recent banking sector events on BFS tech spending outlook.”
Experts said that deal TCV and pipeline will take centrestage and large deals will be in focus in the Q4 results. Other than this, Infosys board will also likely approve the final dividend for FY23. Infosys announced a dividend of Rs 16.50 per share worth Rs 6,940 crore in FY23 so far.