Bengaluru-based IT major Infosys may announce a share buyback along with its second quarter earnings, analysts at brokerage firm Jefferies said.
Jefferies expects Infosys to report a revenue growth of 4% QoQ in constant currency in Q2, driven by deal ramp ups and seasonal strength. “We expect EBIT margins to expand by 30 basis points QoQ, driven by pyramiding, operating leverage and pricing benefits, amidst supply side pressures, higher costs and continued investments in growth. We expect Infosys to retain its 14-16% YoY constant currency revenue growth guidance and 21-23% margin guidance,” the brokerage firm said in an earnings preview.
Infosys’ Q2 results is scheduled to be announced on October 13, 2022.
A share buyback, or share repurchase, is when a company buys back its own shares from investors. It can be seen as an alternative, tax-efficient way to return money to shareholders. Share buybacks reduce the number of shares in circulation, which can increase the share value and the earnings per share (EPS).
During Q2, Jefferies expects aggregate revenues for the sector to be steady at 3.6% QoQ in constant currency, led by Infosys and Coforge. While wage pressures persist, an improving pyramid, operating leverage, and pricing will help a slight 30 basis points recovery in margins.
Amid macro-economic uncertainties, investors will focus on management commentary on the demand environment. “Commentary around deal pipeline, sales cycle, nature of deals and deal tenure, pricing, and vendor consolidation will be keenly watched. Furthermore, there will be a strong focus on commentary around client budgets or reprioritization of client spends,” Jefferies said.