Infosys Q4 net seen down 3.4% to Rs 2,290 cr

Infosys, second largest software services provider is expected to report a profit after tax of Rs 2,290 crore in Q4FY12, degrowth of 3.4% as compared to Rs 2,372 crore in the previous quarter, reported CNBC-TV18.

The fall in profit after tax is due to average rupee rate at 50.22 to the dollar versus rate assumed by the management at Rs 52, which was closing rate of Q3.

Sector analysts feel macro concerns (eurozone woes) will weigh while depreciation in the Indian rupee can provide near term support.

Revenues too are likely to fall 1.6% QoQ to Rs 9,148 crore while the guidance showed and increase of 1-1.3% to Rs 9,391- 9,412 crore.

Earnings before interest and tax (EBIT) is seen declining at Rs 2,750 crore from Rs 2,899 crore during the same period.

Earnings per share is expected to be at Rs 39.9 versus Rs 41.51, but the guidance indicated a spike of 1.5% to Rs 42.12.

Analysts believe valuations are reasonable, but upside looks limited without a stronger-than-expected guidance. The stock fell 0.16% to Rs 2,798 on the BSE.

Q4 expectations

Q4 is a seasonally slow quarter and plus has seen delays in deal closures

Dollar revenues are seen at 1% versus a flat guidance on favorable move in cross currencies
*Dollar revenues growth will be volume driven; pricing is expected to be flat (as indicated by the management last quarter)
*Q3 volume growth at 3.1% - Onsite volume at 1.4% & offsite volume at 3.8% versus 4.5%
*Q3 blended pricing up 0.8% QoQ  - Onsite up 2.3% and offshore up 0.3% (in constant currency (CC)) – up for the second consecutive quarter

Margin decline of 117 basis points QoQ due some headwinds from rupee appreciation QoQ + lower utilization
*Sluggish revenues + decent hiring trends may result in lower utilization
*Q3 utilization (including trainees) at 69.9%; utilization (excluding trainees) at 74.4%)

Currency (Rupee has fluctuated wildly in Q4 from around 48.6 and around 53.3; but average movements have been tepid and hence currency impact is likely to be more muted this quarter)
*Average rupee versus dollar: Indian rupee appreciated 1% on average to 50.22 from 50.74 (unfavorable)
*Average euro – USD: Euro depreciated by 2.7% versus dollar (favorable cross currency)

Hedges at USD 847 million – lowest compared to its peers