The earnings season was kicked off by iGate today and tommorrow it is the turn of Infosys. CNBC-TV18's Research Analyst Sunita Nagpal comments on the prospects of Infosys.

According to CNBC-TV18 estimates Infosys' net profit will be up 5.86% from Rs 929 crore to Rs 983.45 crore and the revenues to rise 7.03% from Rs 3451 crore to Rs 3693.89 crore.

Analysts predict a volume growth of over 10% for Infosys and the billing rates are expected to move up by 0.4%. The net profit growth is expected to be low due to lower other income.

Infosys' 77% of revenues are in dollars, 55% in Euros and 9% in pounds. Analysts expect the company to report revenue growth of 7% QoQ backed by 10% growth in consolidated volumes during the quarter. Billing rates are estimated to improve 0.4% for onsite and 0.4% for offshore. However, the average rupee appreciation of close to 3% during the quarter is expected to have a negative impact on the revenue growth.

Analysts observe that there is an acceleration in client mining especially in the USD 10 million slab. They say in case of Infosys, the factors to watch out for would be the pricing environment, profitability status in subsidiaries and the  direction from annual IT spend review from clients.

According to analysts, a strong rupee appreciation during the quarter is likely to keep the EBITDA margin upside limited despite expected improvement in utilisation rates and subsidiary profitability. They expect margins to improve by 20bp to 32.3% during 3QFY07. Due to lower other income, net profit is expected to grow 5.86% to Rs 983.45 cr which translates into EPS of Rs 17.38 vs guidance of Rs 16.84.

Analysts believe Infosys' comment on pricing will be a key factor in results as unlike other vendors, it is just witnessing 1-2% price uptick with a small portion of its existing clients.

According to Infosys, price uptick in the near term, will be driven by change in the services mix only and like-to-like billing rate increase should not be viewed as a trend as of now.