Infosys to announce earnings on July 12; here are 5 key things to note

"We expect constant currency revenue growth of 3.1 percent and cross-currency headwind of 45 bps. We expect the financial services vertical to report robust growth. Revenues include one month of revenues from the Stater acquisition," Kotak Institutional Equities said.

Prabhudas Lilladher expects the constant currency revenue growth of 2.5 percent and cross currency headwind of 40 bps and said revenue growth will also be aided by Starter NV deal.

Revenue growth in rupee terms could be below 1 percent, analysts said.

Operating Performance

Analysts see some pressure in margins due to wage hikes, which ultimately could impact profitability for the quarter ended June 2019.

Kotak expects its EBIT margin to decline 110 bps due to wage revision for 85 percent of employees that will impact margins by 100 bps, higher H-1B visa applications relative to the previous year that will result in additional costs ,and a rupee appreciation impact of 30 bps.

"Margin impact will be offset to some extent through higher utilisation and cost control measures," it said.

Prabhudas Lilladher expects EBIT margin to decline around 146 bps to 20 percent.

"Pricing and margin trend will be followed closely due to a belief that the company has been aggressive on deal structures and pricing to win contracts and accelerate growth," Kotak said.

Profitability

The fall in net profit is likely to be in double digits as margins are likely to take a hit.

Kotak expects profits to decline 11 percent, while Prabhudas Lilladher feels the net income is likely to decline 16 percent sequentially in the June quarter.

FY20 guidance

Analysts largely expect Infosys to maintain its full-year guidance for revenue at 7.5-9.5 percent and EBIT margin at 21-23 percent.

"Despite the possibility of Infosys revising the lower-end of its current FY20 dollar constant currency sales growth guidance of 7.5-9.5 percent, we do not expect any change given the volatile macro environment," CIMB said.

IDBI Capital also expects no change in constant currency revenue growth and EBIT margin guidance.

Things to watch

Overall, brokerage houses expect investors to focus on the momentum of large deals noting the strong trend of the last four quarters, the attrition rate, which has remained high, levers to defend margin, talent strategy in the US in light of higher H-1B visa applications in the current year, pricing outlook and BFSI revenue growth momentum.

Revenue and margin guidance for FY20, and cues from manufacturing and life sciences vertical across US/Europe will also be closely watched.