What to expect from Infosys Q1 results
The earnings season will move into top gear with India's second largest IT services provider Infosys reporting its quarterly earnings on Thursday. Rival Tata Consultancy Services will also report its earnings on the same day.
July 13, 2012 / 14:08 IST
Moneycontrol Bureau
The earnings season will move into top gear with India's second largest IT services provider Infosys reporting its quarterly earnings on Thursday. Rival Tata Consultancy Services will also report its earnings on the same day. April-June is usually a strong quarter for IT firms, but this time analysts expect the top IT companies will report sluggish revenue growth given the slowdown in growth and clients' delay in decision making amid uncertainties in the global macro economic environment. Infosys, once the trend setter for the industry, has slipped behind TCS in recent quarters, having missed already conservative guidance and forecasting growth much lower than that projected by industry body NASSCOM. It has also been bogged down by internal restructuring issues.Analysts expect Infosys' volume growth in the first quarter will be around 1% sequentially. According to a poll by CNBC-TV18, US dollar revenue growth will be flat sequentially, while rupee revenue is expected to rise around 9%. Its profit will grow around 6% to Rs 2,448 crore. But the key will be US dollar revenue guidance for the full year, which it is likely to cut.The company had surprised the street in April, when it guided for a full year growth of 8-10% in US dollar revenue. Although Infosys' forecast was already significantly lower than the 11-14% growth projected by NASSCOM, the company could slash it's topline forecast further given the current forex rates."At the current currency rates (British pound/USD. Euro/USD, Australian Dollar/USD) the US dollar top-line growth is likely to be impacted by near 1.5% for the full-year FY13. In that regard, FY13 guidance may have to be adjusted downwards," says Yogesh Aggarwal of HSBC Global Research. Infosys on its part has already warned that this year will be difficult."We are in a new normal, we are operating in a pretty volatile environment... While we are seeing that the budgets are closed and actually are marginally down, the visibility in the spending, the confidence of spending by clients is actually quite low," said CEO and MD, SD Shibulal after the fourth quarter results.ICICI Securities analysts Kuldeep Koul and Krupal Maniar feel, Infosys' earnings per share (EPS) guidance could increase on higher rupee US dollar rate."Infosys is expected to use the INR/USD rate of 55.64 while revising its FY13 EPS guidance, which would lead to an EPS in the range Rs180-185," they say.KEY THINGS TO WATCH- Guidance for the second quarter and full year
- Growth in sectors like Banking and financial services (BFSI)
- Comments on pricing/margins
- Deal pipeline/client additions in the first quarter and any impact of clients' delays in decision making
STOCK TALKInfosys shares were up 1% at Rs 2,483.20 on NSE in morning trade on NSE on Wednesday. The stock has slipped 10.5% since it announced fourth quarter results in April, underperforming the broader market. The NSE Nifty index is up 1.3% and the CNX IT index is down 4.5% over the same period.Citigroup and ICICI Securities have a "buy" on Infosys, while Standard Chartered Bank says the stock will "outperform." HSBC has a "neutral" rating on Infosys.Also Read: Expect Infy to cut dollar revenue guidance to 7-8%: IIFLNachiket Kelkar
nachiket.kelkar@moneycontrol.com Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
