Infosys, the country's second largest software services exporter, is likely to report degrowth in profit and dollar revenue for October-December quarter on January 14 due to Chennai floods and cross currency headwinds. Profit is expected to decline 2.9 percent sequentially to Rs 3,300 crore during the quarter on weak operational performance, according to average of estimates of analysts polled by CNBC-TV18.
Revenue may increase 0.7 percent to Rs 15,748 crore in third quarter of current financial year but dollar revenue is seen falling to USD 2,390 million during the quarter compared to USD 2,392 million in preceding quarter.
The IT services provider did not give any profit warning post Chennai floods but analysts still see some impact (may be around 25 basis points) of Chennai rains on company's operations. The company has 17,000 or 10 percent of employees in Chennai.
Non-recurrence of USD 23 million of one time revenue (seen in Q2) and cross currency headwinds of around 30 basis points due to rupee appreciation against GBP and Euro may also have an impact on revenue. Analysts say there could be a marginal contribution (of around 30 basis points) from Noah consulting in November.
In addition to that, the company had already guided for weak performance in October-March period of FY16 by not raising full year guidance despite strong performance in April-September. Also in a concall, it said H2FY16 margins would be lower than H1FY16.
During the quarter, earnings before interest and tax (EBIT) is likely to decline marginally to Rs 3,900 crore from Rs 3,993 crore and margin may shrink by 80 basis points to 24.7 percent on sequential basis. Margin may get impacted by Chennai floods and absence of margin tailwind from one-time revenue accrual in Q2FY16.
Analysts say Infosys is likely to maintain or raise lower end of its FY16 constant currency revenue guidance, currently which is 10-12 percent. Kotak, Nomura and Goldman Sachs expect lower end of the guidance range could be upped to 11-12 percent and they see actual constant currency revenue at closer to 12 percent.
Apart from outlook for 2016, other factors to watch out for would be attrition (which was at 19.9 percent in December quarter) and deal wins (total contract value improved for 3 straight quarters to USD 983 million (in Q2FY16) from USD 688 million in Q1, USD 414 million in Q4FY15 and USD 213 million in Q3FY15.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
