Infosys Q1 net seen down 4.8% to Rs 3423.3 cr: ICICIdirect

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ICICIdirect has come out with its first quarter (April-June) earnings estimates for the technology sector. The brokerage house expects Infosys to report a 4.8 percent degrowth quarter-on-quarter (growth of 13 percent year-on-year) in net profit at Rs 3423.3 crore.Sales are expected to increase by 3 percent Q-o-Q (up 18.8 percent Y-o-Y) to Rs 17052.1 crore, according to ICICIdirect.Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to fall by 3.9 percent Q-o-Q (up 18.5 percent Y-o-Y) to Rs 4456.9 crore.ICICIdirect's Report on Infosys:We expect Infosys to report revenue growth of 3.7 percent in constant currency terms with cross currency a tailwind of 50bps. Revenue growth in USD terms should be 4.2 percent.Also, though we expect Infosys to retain its FY17 revenue growth guidance of 11.5-13.5 percent in CC terms, we expect the company to lower its USD revenue growth guidance from prior 11.8-13.8 percent to 11-13 percent primarily given the recent depreciation in the GBP and EUR against the USD. We accordingly lower our FY17 revenue growth estimate to 12 percent from the earlier 12.8 percent.Wage hikes and visa costs will be the primary margin headwinds during the quarter, as a result of which we expect EBIT margin to decline by 180bps to23.7 percent in Q1FY17.ESOP expenses and wage hikes to the senior most 500 employees will be margin drags in Q2FY17 though it should get offset by absence of visa costs and better seasonality.We retain our margin estimate of 24.6 percent for FY17 – in the lower end of the 24-26 percent range guided by the company.We project an EPS of Rs15 for Q1FY17 – a Q-o-Q decline of 4.8 percent.Magnitude of deal intake (expectation of USD 1 billion), commentary on the retail vertical and uptake of new cognitive platforms in terms of POCs/pilots would be the key things to watch for Infosys.Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.