Infosys fourth quarter numbers and guidance were unimpressive, but the payout policy could cushion near term downside in the stock price.
The North American market accounts for over 62 percent of Infosys' revenue. For the quarter ended March 2017, revenue from this market grew 1.3 per cent sequentially for the company.
The IT major on Thursday reported a consolidated profit at Rs 3,603 crore for the January-March quarter, de-growth of 2.8 percent from Rs 3,708 crore in previous quarter.
Sector experts welcomed Infosys’ new capital allocation policy announced with its fourth quarter earnings Thursday, but sounded a note of caution on the cut in margin guidance.
Even as analysts expect Q4 profit to decline 3.7 percent, will the software major meet its FY17 dollar revenue guidance?
HCL Technologies, one of the largest software services providers, reported profit at Rs 2,062 crore on revenue of Rs 11,814 crore for the quarter. Its earnings matched expectations.
Religare maintains buy rating on the stock as it finds valuation to be inexpensive on modest dollar revenue growth expectations believing that risk-reward remains favourable.
Though the H1-B visa policy is still unclear, expect US President-elect Donald Trump to be business friendly in the long term, says Vishal Sikka, MD and CEO of Infosys.
Girish Pai, head of research at Nirmal Bang Institutional Equities said that the guidance revision is a definite positive in the short-term. However, he is more worried for medium and long-term growth on both structural and cyclical parameters.
In an interview to CNBC-TV18, Sandip Agarwal, VP-Wholesale Capital Markets at Edelweiss Financial Services spoke about Tata Consultancy Services' Q3 results as well earnings estimates of Infosys for the same quarter.
Net Sales are expected to be flat at Rs 17324.4 crore for Q-oQ (up 9 percent Y-o-Y), according to KR Choksey.
IT services exporter Infosys' third quarter earnings are expected to be subdued due to seasonal weakness and RBS's contract cancellation. All eyes are on its full year guidance that had been changed twice from the start of current financial year.
Speaking to CNBC-TV18, Shashi Bhusan of IDFC Securities said that he expected a weak performance from both TCS and Infosys.
According to Sanjiv Bhasin of IIFL there is a lot of pessimism around the third quarter earnings but he expects banks to be in a sweet spot.
Net Sales are expected to decrease by 1.3 percent Q-o-Q (up 7.5 percent Y-o-Y) to Rs 17088.7 crore, according to Motilal Oswal
The impact of oil prices, Brexit and US presidential elections tend to be over stated, Vishal Sikka says. The bigger issue is the nature of computing and the fact that today everyone wants to be a tech company, he adds.
Overall, Infosys Q2 was better than its rival. IT solutions provider Infosys ' profit beat analysts' expectations, rising 4.9 percent to Rs 3,606 crore in July-September quarter but reduced full year revenue guidance considerably due to uncertain external environment.
Reacting to the results, Nilesh Shah of Envision Capital said that the risk with lowering FY17 guidance is that analysts will now not be able to forecast FY18 figures with a fair degree of certainty.
Revenue is expected to increase by 2.2 percent Q-o-Q (up 9.7 percent Y-o-Y) to Rs 17150.9 crore, according to ICICI Securities.
Sandip Agarwal of Edelweiss Financial Services said they haven‘t changed their hold rating on TCS and does not see a significant downside.
Its constant currency guidance is expected to be lower to 8.5-10 percent from 10.5-12 percent. Infosys had already lowered guidance to 10.5 percent-12 percent in constant currency from 11.5-13.5 percent in last quarter.
Net Sales are expected to increase by 2.2 percent Q-o-Q (up 9.7 percent Y-o-Y) to Rs 17149.2 crore, according to Kotak Securities.
Net Sales are expected to increase by 1.6 percent Q-o-Q (up 9 percent Y-o-Y) to Rs 17047.4 crore, according to Motilal Oswal.