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Infosys' profit for September quarter is likely to get a push on the back of higher growth, margin expansion as well as the absence of one-time loss related to Panaya downgrade, multiple analysts said in their reports.
Motilal Oswal expects India’s second-largest IT services firm to report profit of Rs 4,150 crore, while Emkay Global pegs this figure to be at Rs 4,101 crore. Meanwhile, Axis Securities expects profit after tax (PAT) of Rs 3,880 crore for the quarter under review.
The constant currency growth is likely to be around 3.5 percent QoQ for Q2, analysts at Motilal Oswal wrote in their report. Meanwhile, Emkay and Axis Securities see this around 2.2-2.5 percent.
“We expect acceleration now, led by seasonal strength and an improvement in verticals like BFS, resulting in 3.5% QoQ constant currency growth for 2QFY19,” Motilal Oswal’s report further added.
On the EBIT margin front, the number is expected to expand by 40 bps QoQ to 24.1%, led by rupee depreciation, partly offset by wage hikes and variable pay. It now expects Infosys to raise its annual EBIT margin guidance by 50 bps.
Cross currency headwinds are likely to be around 100-150 basis points, both Axis Securities and Emkay have written in their reports.
Key things to watch out for
- Update on internal stability of the company and strategy under the new leadership
- Outlook for verticals like BFS and retail
- Commentary around margins in lieu of new investments and recent currency depreciation
- Any revisions to revenue growth and margin band guidance
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