Infosys Q1 Preview: Net profit may jump 6% YoY; strong sequential revenue growth seen

for the April-June 2024 period is likely to increase 6% year-on-year, an average estimate of four brokerages showed.

ETMarkets.com

Key monitorables to watch out include deal TCVs and pipeline, pricing scenario, attrition, and outlook on growth and margins.

In the preceding March quarter, posted a 30% year-on-year growth in its consolidated net profit at Rs 7,969 crore, while revenue stood at Rs 37,923 crore, up 1% year-on-year.

Here's what analysts expect from Infosys Q1

Kotak Equities

We forecast revenue growth of 2.5%, led by ramp-up of multiple mega-deals, March 2024 quarter had a one-off impact of 100 bps on revenues from rescoping of engagement with a financial services client. This provides a low base and effectively a 1% kicker to June 2024 quarter growth numbers.

We expect a 80 bps quarter-on-quarter increase in EBIT margin on the back of the absence of a 100 bps one-off impact. At the same time, we expect normalization of ECL and post-sale client support provision leading to a headwind of 50 bps. Net accrual of benefit of 50 bps and lower visa and subcon charges and higher employee utilization rate.

Motilal Oswal

Revenue growth is expected to rebound to 2% quarter-on-quarter CC, on account of ramp-up of large deals won in FY24. We expect the deal TCV to be robust in 1Q; however, deals should be skewed towards the cost-takeout initiatives.

Operating margin is expected to inch up by 30bp owing to growth and absence of wage hikes. We expect the company’s operating margin to be at 20.4%.

Expect Infosys to maintain its growth guidance of 1-3% CC for FY25.

Nomura

We expect cc growth of 3.0% quarter-on-quarter driven by large deals ramp-up, nonoccurrence of one-time BFSI client contract restructuring impact of 100bp and strong seasonality for Infosys. We expect Infosys to retain its FY25F revenue growth guidance of 1-3% in cc.

We expect EBIT margins to expand 80bp q-q with non-occurrence of onetime BFSI client contract restructuring impact of 100bp. Absence of visa cost will be an additional tailwind quarter-on-quarter.

Key things to watch out for - commentary on cost takeout projects, banking vertical and outlook on client discretionary spend.

Axis Securities

We expect Infosys to report strong revenue growth of 2.4% quarter-on-quarter, highest among the Largecap peers. We also expect operating margins to expand, aided by moderated onsite expenses.

We also expect the management to retain 1% to 3% the company’s revenue growth guidance for FY25E.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)