Technology bellwether Infosys will open its technology earnings calender for the first quarter of FY12 on Tuesday with moderate expectations. Most equity analysts expect Infosys to under-perform No.1 software services exporter TCS and smaller rival HCL in terms of top line growth because of internal reshuffle that could have distracted the firm?s management. The Street also does not expect any upward revision in the firm?s full-year revenue guidance of 18%-20%.
Standard Chartered expects Infosys to post dollar revenue growth of 4.9% to $1.68 billion, beating the top end of the firm’s Q1 guidance of 3.6%. In comparison, it sees TCS and HCL posting growth of 6.3% and 5.5% respectively. Infosys, according to Sharekhan, is expected to grow by 4.4% in top line, below the average sequential revenue growth of 5.2% of the top four IT companies during the June quarter. In rupee terms, the brokerage house sees Infosys inching up 3.4% sequentially to R7,495 crore.
?We expect Infosys to report a 4.4% q-o-q growth in its dollar-term revenues to $1,672.9 million led by volume growth and cross-currency benefit of 90 basis points. Infosys is expected to beat its revenue guidance of $1,643-1,659 million for the June quarter,? Sharekhan said in a report. Ebitda margins, it added, is likely to come off by 230 basis points sequentially to 29.7% on account of wage hikes effected during the quarter and net profits may decline by 4.1% to R1,742.6 crore.
Other brokerages also see bottomline headwinds for the company. Motilal Oswal anticipates a 280 basis points decline in Infosys? Ebit margin while Kotak Institutional Equities anticipates a sequential margin decline of 250 basis points on account of wage revisions, stronger rupee, and drop in utilisation levels.
?Wage hikes will be the key headwind for margins. We expect a 280 basis points q-o-q decline in Ebit margin versus the company?s guidance of 400 basis points q-o-q decline in Q1 and 300 basis points decline for the full year. Our profit after tax estimate is R1690 crore down 7% q-o-q, and EPS estimate is R29.6 versus the company?s guidance of R27.6-28. The higher assumption is on the back of better-than-guided growth and operating margin,? Motilal Oswal said in a report.
While most analysts don?t see any revision in the full year top line guidance, some do expect the EPS outlook to be upgraded. Kotak, for instance, expects the EPS guidance for FY12 to be revised upwards by 1-2% on possible margin upside. Sharekhan sees the EPS outlook to be revised to around R130-131 from R126.05-128.21 earlier.
Shashi Bhusan of Prabhudas Liladher expects Infosys to revise revenue growth guidance to 20-22% on the back of stronger than guided performance in Q1. ?Moreover, we expect EPS guidance to be R130-132. We also expect the company to change their tone to moderate bullish stance, with few words of caution on uncertainty. However, guidance of around 22% would make strong statement to investors,? he said. Analysts said they would watch the company’s commentary on the macroeconomy as well as the ongoing visa probe in the US.