Infosys is likely to report strong revenue and net profit growth up to 10% on-year for the quarter ended 30 June 2022 (Q1FY23), driven by healthy deal pipeline and order book momentum. EBITDA margins, however, are expected to remain under pressure on account of wage hikes, increased travel costs. Analysts expect broad based growth across industry verticals. Commentary on outlook around attrition, deal environment, FY23 revenue and margin guidance would be key to watch out for. Infosys is slated to report its results on Sunday, 24 July 2022. The information technology services major had reported revenue at Rs 32,276 crore in the last quarter of FY22 (Q4FY22).
Net profit to rise up to 10%
According to analysts, the demand environment remains strong in the IT services sector even in the face of global macroeconomic concerns. Revenue growth is expected to remain strong for companies like Infosys, driven by accelerated adoption of digital technologies and migration to cloud based solutions in the aftermath of covid19 pandemic. The performance would be broad-based with improving traction across BFSI, Telecom, Healthcare, Manufacturing and Retail verticals. Motilal Oswal expects Infosys to report net profit at Rs 5,710 crore, up 9.8% on-year. Sharekhan anticipates the IT major to report on-year revenue growth of 16.9% per cent to Rs 34,129 crore.
EBITDA margins likely to remain under pressure
Infosys’ EBITDA margins are expected to remain under pressure for the quarter under review, due to salary hikes, supply-side pressures, and travel costs. Sharekhan expects margins to decline 278 bps Philip capital projects margins to decline 150 bps. However, they anticipate the IT major to retain 13 to 15 per cent CC revenue growth and 21 to 33 per cent EBIT margin guidance. Analysts at IIFL Securities expect margins to remain flat despite wage hikes.
What to watch out for in Q1 earnings
– FY23 revenue and margin outlook
– Risk on demand/outlook from macro headwinds
– Updates on ramp-up of deals
– Core market (US, Europe) performance
– Large deal wins and pipeline
– Comments around pricing and performance of top accounts
Estimates for April-June quarter (on-year)
Net Profit: 9.8% up at Rs 5,700 crore
Revenue: 16.2% up at Rs 33,800 crore
Net profit: 7.9% up at Rs 5,606 crore
Revenue: 16.9% up at Rs 34,129 crore
Net profit: 10.6% up at Rs 5,743 crore
Revenue: 22.4% up at Rs 34,147 crore