Infosys is likely to report a consolidated net profit jump of 10-14% on-year for the quarter ended 31 December 2022. IT bellwether Infosys is expected to report 19-20% revenue growth for October-December, according to analysts. Brokerages believe that EBIT margins will fall on-year to 21-24%. Nirmal Bang sees Infosys’ deal wins at $2 billion. Investors will keenly watch demand trends in key verticals such as BFSI, retail, manufacturing, and communications, deal intake, and pricing environment considering high inflation. Ahead of its earnings, Infosys stock has an average price target of Rs 1,716.43, suggesting a potential 19% upside ahead.
Infosys Q3 results due date, time
Infosys will announce Q3FY23 results on Thursday, 12 January 2023, around 3.45 PM, according to the regulatory filing. Ahead of the results, the American Depository Receipts (ADRs) of Infosys rose on the New York Stock Exchange on Monday, buoyed by the encouraging numbers of peer TCS for the quarter ended December 2022. ADRs of Infosys traded 1.3% higher at $18.05.
Infosys likely to report constant currency revenue growth in Q3
In its Q3FY23 preview report for the IT sector, Emkay Global on Infosys said, “We expect 0.8% QoQ USD revenue growth in Q3 after factoring in 20bps cross-currency headwinds. EBIT margin is expected to expand by ~20 bps on account of operating efficiencies, pyramid rationalisation, subcontracting costs optimisation, and rupee depreciation.” Brokerage firm Philip Capital expects Infosys to retain 15-16% CC revenue growth and 21-23% EBIT margin guidance.
Infosys Q3 EBIT margin to contract on-year
ICICIdirect said the December quarter is expected to be hit by furloughs, with furloughs likely to be higher than the last couple of years. The benefits of lower sub-contracts and higher billable freshers, and rupee depreciation, should aid margin sequentially, the brokerage. Investec expects EBIT margin at 21.9% against 23.5% in the year-ago quarter. According to analysts at HDFC Securities Institutional Equities, the IT sector is expected to post a soft quarter, impacted by Q3 seasonality and worsening macro. The elements of macro volatility is resulting in growth moderating towards pre-COVID even as long-term drivers are unchanged.
Key things to watch in Infosys Q3 results
– FY23 guidance: Emkay expects the company to retain its 15-16% CC on-year revenue growth and 21-22% EBIT Margin
– Any delay/deferral/cancellation of projects due to macro uncertainties and high inflation
– Update on client conversations – impact from high energy prices, inflation, and potential economic slowdown/recession
– Management commentary on — CY23 IT budget; demand environment in BFSI, manufacturing, retail, and communications; pricing environment
– Deals pipeline, nature of deals – cost takeouts versus discretionary/transformational, the pace of decision making, and deal closure momentum
According to analysts at brokerage firm Sharekhan, major price damage is over. However, macro-overhang is likely to restrict outperformance of IT stocks including Infosys. “We believe concerns relating to macro headwinds are unlikely to abate anytime soon thus restricting any material outperformance for Indian IT companies. We advise investors to accumulate stocks in a staggered manner, our underweight stance at a portfolio
level continues,” they said.
Infosys Q3 result estimates
Axis Securities
Revenues: Rs 38,000 crore, 19.2% on-year
EBITDA: Rs 9,430 crore, 12.5% on-year
EBIDTA Margin: 24.8%
PAT: Rs 6,640 crore, 14.3% on-year
Sharekhan
Revenue: Rs 38,107 crore, 19.6% on-year
Margin: 22.4%
Profit: Rs 6,563 crore, 13% on-year
Philip Capital
Revenues: Rs 37,835 crore, 19% on-year
EBITDA: Rs 8,202 crore; 9.6% on-year
EBIT Margin: 21.6%
PAT: Rs 6,657 crore; 14.6% on-year
HDFC Securities
Revenue: Rs 38,107 crore; 19.6% on-year
EBITDA: Rs 8,391 crore; 12.1% on-year
EBIT Margin: 22%
APAT: Rs 6,393 crore; 10% on-year
Reliance Securities
Revenue: Rs 37,970 crore; 19.2% on-year
EBITDA: Rs 8,282 crore; 10.7% on-year
EBIT Margin: 21.8%
PAT: Rs 6,427 crore; 10.6% on-year