Infosys Q1 profit may slip 2.5%, $ revenue seen up 3%: Poll

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26 Aug, 2025 12:21

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Infosys's Q1 earnings, which will be announced on July 21, are expected to be steady after reporting lower than expected numbers in March quarter. The company has been reiterating that it will meet guidance and the street is also encouraged by MD & CEO Vishal Sikka’s vision & roadmap for Infosys, but analysts said the execution is important.

According to a CNBC-TV18 poll, profit after tax is expected to fall 2.5 percent sequentially to Rs 3,017 crore while revenue is seen rising 5 percent to Rs 14,097 crore in the quarter ended June.

Dollar revenue may grow 3 percent to USD 2,224 million during April-June quarter compared to USD 2,159 million in March quarter. Constant currency revenue growth may be around 3.5 percent.

Analysts believe the topline may get benefitted from acquisitions. They see two months contribution from Panaya (acquired in February) and small contribution from Skava (acquired in June) to revenue.

During the quarter, earnings before interest and tax (EBIT) is seen falling 1.5 percent quarter-on-quarter to Rs 3,396 crore and margin may decline 160 basis points to 24.1 percent due to wage hike & visa cost, which may be partly offset by 2.1 percent rupee depreciation.

The second largest software services firm hike wages by 2 percent for onsite employees and 6.5 percent for offshore during the quarter.

Analysts believe the deal pipeline is good and win rate has improved in the quarter gone by.

They also believe FY16 guidance is likely to be maintained as the company has sounded confident given deal momentum (appears to have improved), win rates have improved and strong deal pipeline.

Sikka during the quarter, has maintained aspiration to reach industry growth by 2017 and targetted USD 20 billion in revenue by 2020 (which may be achieved by increasing current revenue USD 8.7 billion to USD 16.5 billion in 5 years + USD 2 billion from new business and USD 1.5 billion from mergers & acquisitions. He sees operating profit margin at 30 percent by 2020 (against current 25.9 percent). He also wants to improve employee productivity to USD 80,000 from USD 5,23,000.

Key factors to watch out for would be details on company's strategy to meet full year guidance, seasonality, any moderation in commentary on margins, and attrition (attrition is seasonally high in June quarter). Rising attrition had been a significant concern for Infosys, though it moderated in March quarter.

The IT company has cash balance of around USD 5 billion. Hence, artificial intelligence, machine learning, collaboration and digital are the key focus areas for it. Analysts believe Infosys would prefer small tuck-in acquisitions.