Infosys Q1 profit seen flat at Rs 3595 cr: Motilal Oswal

Motilal Oswal has come out with its first quarter (April-June) earnings estimates for the technology sector. The brokerage house expects Infosys to report a flat growth quarter-on-quarter (growth of 18.7 percent year-on-year) in net profit at Rs 3595.5 crore.Sales are expected to increase by 2.8 percent Q-o-Q (up 18.6 percent Y-o-Y) to Rs 17019.7 crore, according to Motilal Oswal

Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to fall by 2.9 percent Q-o-Q (up 19.8 percent Y-o-Y) to Rs 4506.3 crore.

Motilal Oswal's report on InfosysINFO guided for FY17 revenue growth of 11.5-13.5 percent Y-o-Y CC, implying a CQGR of 2.95-3.7 percent over the course of FY17. During the quarter however the company cited likelihood of quarterly bumps in key sectors that it hadn’t anticipated earlier, while maintaining its annual guidance. Given these conditions, we expect lower growth at INFO in 1QFY17, compared to 1QFY16, at 4 percent Q-o-Q in USD terms (3.7 percent Q-o-Q CC). Growth in the previous year was 4.5 percent Q-o-Q.

In INR terms, our revenue growth estimate is 2.8 percent Q-o-Q on the back of 1.1 percent sequential appreciation in INR v/s USD.  We expect EBITDA margin to decline 150bp Q-o-Q to 26.5 percent. The factors that we expect to play on margins are wage hike, pricing pressure, INR appreciation and visa expenses. Our PAT estimate is Rs 35.96b, flat Q-o-Q as revenue growth and higher forex gains get offset by the margin decline.