Preview | Infosys' Q4 revenue growth likely to be strong but wage hikes may hit margin, FY22 guidance key

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26 Aug, 2025 12:21

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Software services provider Infosys is expected to show robust growth in revenue for the March quarter but margin may come under pressure on wage hikes when the Bengaluru-based company releases its quarterly scorecard on April 14.

According to brokerages, revenue growth in constant currency could be around 4 percent quarter-on-quarter and in dollar terms may be around 5 percent.

"USD revenue is likely to rise 5 percent QoQ, while constant currency revenue growth is likely at 4.2 percent QoQ with favourable cross-currency tailwinds to boost reported USD revenue growth by 74 bps," KR Choksey said.

ICICI Direct expects Infosys to report 4.5 percent QoQ increase in revenue in constant currency terms, mainly led by traction in cloud migration, bigger deal wins and Vanguard deal.

"The company is also witnessing a healthy deal pipeline led by lift & shift deals, acceleration in digital technologies and cost take out deals. With cross-currency tailwind, we expect dollar revenues to increase 5.3 percent QoQ," said the brokerage.

Overall, in case of FY22 guidance, the IT services company is expected to guide for 12-14 percent constant currency revenue growth and 22-24 percent EBIT margin guidance for the full year.

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Infosys shares have rallied 11 percent in the 2021 calendar year but corrected 2 percent on April 13 ahead of the quarterly earnings and after TCS' in-line numbers for the March quarter.

According to brokerages, the fall in EBIT margin is expected to have a wide range of 60-200 basis points decline on sequential basis in Q4FY21.

"We expect margins to decline 132 bps QoQ due to wage hikes, higher travel and facility cost partially offset by automation and offshoring," said ICICI Direct, which sees a 1.4 percent QoQ increase in profit.

KR Choksey says EBIT margin is likely to decline 62bps QoQ on wage hike impact, some return of cost items, while adjusted profit is likely to rise 9.7 percent QoQ aided by higher other income and lower tax rate.

Key things to watch out for would be FY22 revenue and margin guidance, commentary on client budgets, second wage hike, ramp-up of Daimler deal, traction in digital technologies, key vertical outlook including BFSI and Retail, and improvement in troubled verticals like energy.