Infosys is likely to post a strong set of numbers for the quarter ended 30 September on the back of strong momentum and ramp-up of past deals. The consolidated revenue for the quarter is expected to rise 23-24% on-year, according to estimates given by several brokerage firms. The consolidated net profit of Infosys is seen rising in 6-9 per cent range on a yearly basis. The company’s board will meet on October 12 and 13 to approve financial results for Q2FY23. Infosys will consider a proposal for a share buyback, its fourth since 2017, on the same day.
Infosys share buyback may limit stock price downside
“Infosys is expected to announce cash buyback of around Rs 8,000 crore to Rs 10,000 crore. As revenue growth outlook has moderated as clients have become cautious, this buyback is better use of surplus cash lying on books. It should limit downside to stock price in near term. The buyback price is expected to be at significant premium to CMP. In the current economic environment, it appears to be the efficient utilization of cash reserves to boost shareholder return,” said Yes Securities in a note.
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Broad-based growth likely for Infosys, with some cross currency impact
According to brokerages, growth in Q2FY23 will be broad-based. Analysts at Sharekhan expect the IT services major to post highest cross currency (CC) revenue growth sequentially among Tier-1 IT companies, led by robust digital transformational programs of clients and ramp-up of mega deals. “However, we expect 170 bps cross currency impact on CC revenues,” they said. They also expect EBIT margins to improve, led by higher utilization, better pricing at term verticals like manufacturing offsetting impact of wage revision, rise in travel cost and supply side issues. Large deal activity, vertical-wise outlook, attrition trend, and FY23 revenue, margin guidance will be among the key announcements to watch for. Outlook on the inflation rates in the USA and geopolitical issues in the EU will also be keenly eyed.
Infosys Q2FY23 Result Estimates
Anand Rathi
Sales: Rs 36,456 crore, 23.2% (on-year)
EBIT Margin: 20.2%
Net Income: Rs 5,768.8 crore, 6.4% (on-year)
Motilal Oswal
Revenue: Rs 36,500 crore, 23.3% (on-year)
EBIT Margin: 20.2%
PAT: Rs 5,900 crore, 9.4% (on-year)
Reliance Securities
Revenue: Rs 36,525 crore, 23.4% (on-year)
EBIT Margin: 20.1%
Net income: Rs 5,879.6 crore, 8.5% (on-year)
Sharekhan
Revenue: Rs 36,772 crore, 24.2% (on-year)
EBIT margin: 23.1%
Net profit: Rs 5,847 crore, 9% (on-year)
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Ahead of the Q2 results, Infosys president Ravi Kumar S resigned from his post. The company did not give any reason for the move. In his role as president, Ravi Kumar S led the Infosys Global Services Organisation across all industry segments. According to the 2021-22 annual report of Infosys, Kumar was the third highest-paid senior executive of the company after CEO Salil Parekh and former COO UB Pravin Rao.
(The views expressed are of respective analysts, brokerages, and do not reflect the official position or policy of FinancialExpress.com.)