Infosys Q3 Results Preview: Muted Revenue Growth Expected, Guidance May Be Revised

Jefferies expects Infosys to narrow its FY25 revenue growth guidance to 4–4.5% from 3.75–4.5%.

IT major Infosys Ltd. is set to announce third-quarter results on Thursday (Photo: Vivek Amare/NDTV Profit)

IT major Infosys Ltd. is set to announce third-quarter results on Thursday. In a seasonally weak quarter, the company is expected to see muted revenue growth, weighed down by furloughs. Margins are expected to remain flattish, profit to rise sequentially, and yearly guidance to be narrowed. 

Net profit may rise 4.3% sequentially to Rs 6,787 crore for the quarter ended December, according to the consensus of analysts' estimates tracked by Bloomberg. Revenue is expected to marginally rise by 0.8% for the period to Rs 41,331 crore, per estimates. 

Infosys Preview Q3 FY25 (Consolidated, QoQ)

  • Revenue may rise 0.8% to Rs 41,331 crore versus Rs 40,986 crore.

  • EBIT may rise 1.3% to Rs 8,762 crore vs Rs 8,649 crore.

  • EBIT margin expected at 21.2% vs 21.1%.

  • Net profit may rise 4.3% to Rs 6,787 crore vs Rs 6,506 crore.

Brokerage Views

Infosys' revenues in the third quarter is expected to grow by 0.3% sequentially despite residual revenues from in-tech acquisition due to usual seasonality in the third quarter.

"We expect margins to be steady QoQ, aided by INR depreciation. We expect Infosys to narrow its FY25 revenue growth guidance to 4–4.5% YoY from 3.75–4.5% YoY and maintain margin guidance of 20–22%. Expect the large deal TCV to be $2.5–3 billion," Jefferies said.

JM Financial expects 90-basis-point cross currency headwind sequentially and estimates an impact of 130 bps of furloughs. "Lower transition costs associated with large deals could benefit margin, though lower growth will limit the extent of expansion. Expect Infosys to revise its guidance to 4–4.5% YoY," the brokerage said.

Besides furloughs, stabilisation in the large deal ramp, which had aided growth in the first half, could restrict sequential growth, it added.

"Expect deceleration in revenue growth after very strong 1H. We expect 0.5% QoQ growth. Weakness will be led by a higher base of mega deal ramp-ups in 1H, furloughs and weakness in Auto and Hi-Tech. This will be offset by traction in BFSI. Further, strong momentum in less than $50-m deals is expected," according to DAM Capital.

Key Things To Watch

  • FY25 Guidance update.

  • Outlook on short-cycle deals.

  • Update on discretionary spending.

  • Hiring and wage hike plans. 

Employee Headcount, Attrition 

Total employee count at the end of the second quarter was 317,788, with an addition of 2,456 employees in the quarter. Attrition marginally inched up to 12.9% from 12.7% in Q1.

As other industry peers see attrition hike and headcount reduce, Infosys' update on hiring plans and upcoming cycles are to be watched out for.

Also Read: Q3 Results Updates: CEAT, Oracle Profit Declines; Punjab & Sind Bank Profit Up Over Twofold

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