While majors in the IT sector like Tata Consultancy Services (TCS) and HCL Tech already having released their fiscal third quarter earnings, another giant in the industry, Infosys is all set to release its Q3 numbers on Thursday (January 16). Brokerage firms and analysts said that the company will post a muted revenue growth on a sequential basis, while the net profit is seen rising in the low single digit. However, per most of the brokerage firm reports, Infosys is anticipated to announce an upward revision in the company’s revenue guidance. The IT major, in Q2, had revised its revenue growth guidance for the seventh time in eight quarters to 3.75-4.5 per cent in constant currency (cc) terms.

Earlier in a regulatory filing on January 08, Infosys had said, “Infosys, a global leader in next-generation digital services and consulting, will announce results for the third quarter ended December 31, 2024 on Thursday, January 16, 2025 around 3:45 p.m. Indian Standard Time (IST).” It also announced that the post this, the leadership team will also hold a press conference at 4:30 pm on the same day. “The participating executives will address questions from the media during this interaction, which will be streamed live on the Investor Relations section of Infosys website,” it added.

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According to a Monecontrol poll, Infosys is estimated to post a 0.5 per cent sequential uptick in revenue to Rs 41,206 crore and the Q3 profit is projected at Rs 6,734 crore, up 3.5 per cent on-quarter. 

With the third quarter of the financial year being a seasonally weak quarter for the IT industry due to higher furloughs on account of Christmas and New Year holidays, Infosys is expected to post an uptick in revenue on QoQ basis

An analysis report by JM Financial stated “We expect 90 bps QoQ cross-currency headwind. We estimate 130bps impact of furloughs on Infosys.” The brokerage firm said that besides furloughs, stabilisation in the large deal ramp, which aided H1 growth, could restrict sequential growth. Further, lower transition cost associated with large deals could benefit margin, though lower growth will limit the extent of expansion. “Expect Infosys to revise its guidance to 4-4.5 per cent YoY cc,” it said. Per JM Financial, Infosys is expected to record Q3 revenue at Rs 41,235.70 crore, posting a growth of 6.2 per cent YoY and profit is estimated at Rs 6768.70 crore, up 10.7 per cent on-year. The company EBIT is projected at Rs 8889.30 crore. 

Further, ICICI Securities also maintained that Infosys is expected to raise FY25 revenue growth guidance to 4-4.75 per cent, from 3.75- 4.5 per cent. While clients are still cautious on IT spending, ICICI Securities said, cost efficiency focus and deal consolidation is expected to continue from Q2. “We expect the quantum of shorter deals to further improve indicating incremental recovery in demand. We expect margins to be flat QoQ. The full year margin is expected to be within the guidance range of 20-22 per cent. We expect revenue growth to be led by BFSI, technology and energy & resources. We expect EBIT margin to decline ~18bps on furloughs and lower working days, partially offset by tailwinds from rupee depreciation,” the brokerage firm said. Per ICICI Securities, Infosys is expected to post Q3 revenue at Rs 41,323.90 crore, up 6.4 per cent YoY and profit for the period is projected at Rs 6546.00 crore, posting a growth of 7.2 per cent on-year. The EBIT for the period is estimated at Rs 8646.10 crore. 

Now, Elara Capital too maintained that dollar-denominated revenue growth will drop for players including TCS, Infosys, Wipro and Tech Mahindra, due to furlough impact and unfavourable currency movements. Furlough impact in Q3 is expected to be normal this year, it said. The analysts at the brokerage firm maintained that Infosys’ margin may drop 30 bps QoQ due to negative operative leverage. Per Elara Capital Infosys is expected to record Q3 revenue at Rs 40,698.50 crore, up 4.8 per cent on-year and profit is estimated at Rs 6437.80 crore, up 5.4 per cent YoY. EBIT margin is projected at 20.8 per cent. 

Here are things to watch out for as Infosys will announce its Q3 earnings report on January 16:

  • Investors and market participants will keep an eye on the announcement on FY25 revenue guidance. Per most brokerage firms, Infosys is expected to announce an increase in its revenue guidance or will narrow its guidance band. It is estimated that Infosys’ FY25 revenue guidance will be revised to 4-4.75 per cent from 3.75- 4.5 per cent.
  • Another monitorable is EBIT margin, which, according to analysts, is projected at 21.3-21.5 per cent. While ICICI Securities maintained that EBIT margin is expected to decline by approximately 18 bps on furloughs  and lower working days, partially offset by tailwinds from rupee depreciation, Elara Capital estimated a drop of 30 bps QoQ. Although, a part of this will be offset by pricing gains, subcontractor cost optimisation, and Project Maximus.
  • Infosys’ Q3 results announcement will also give an update on deal wins. While the IT sector witnessed subdued deal wins during the quarter, large TCV for Infosys declined from $4.1 billion in Q1FY25 to $2.4 billion in Q2FY25. JM Financial said that investors will keep an eye on announcements on any uptick in net new deal wins and progress on the large deal pipeline. Further, it also maintained that an update on a smaller deal pipeline is also awaited with outlook on discretionary spend environment especially in BFSI and retail. ICICI Securities said, “We expect the quantum of shorter deals to further improve indicating incremental recovery in demand.”
  • Infosys Q3 announcement will also be awaited for announcement on headcount growth and its attrition rate. Infosys’ headcount rose by 2,456 to 3,17,788 in Q3FY25, compared to 3,15,332 in Q2. Voluntary attrition increased slightly to 12.9 per cent. Wage hikes originally scheduled for Q3 may now be deferred to Q4.