Infosys Q1 Result Preview: Expect softer revenue, margins; here's what to watch out for
Motilal Oswal Financial Services expects Infosys to report muted revenue growth. The brokerage firm also sees the risk of guidance moderation for FY24. As per the estimates of Motilal Oswal, Infosys may see a 9.8 per cent year-on-year (YoY) rise in revenue in rupee terms.
Profit after tax (PAT) may rise 17.8 per cent YoY and 3 per cent quarter-on-quarter (QoQ), Motilal said. "Operating margin may decline by 100 bps, due to muted revenue performance and wage hike. Deal wins may remain resilient.
Infosys has a few mega deals in the pipeline. Outlook on discretionary spends, deals, margins, and FY24 guidance are key things to be watched out for," said Motilal Oswal. As per the estimates of Kotak Institutional Equities, Infosys' Q1FY24 revenue may rise 9.8 per cent YoY and reported PAT may see a 14.1 per cent YoY growth.
The brokerage firm said the low base of the March 2023 quarter, which also included revenue reversals (close to one per cent of revenues), sets the platform for moderate growth in the quarter. High billing days also help. Kotak said the headwinds include the full quarter impact of project cancellations that occurred in March 2023 and general weakness in discretionary spending, especially in North America.
"We expect a 30 bps QoQ decline in EBIT margin. Headwinds in the quarter are in the form of higher variable compensation (nearly 80 per cent versus 60 per cent in the March 2023 quarter) leading to a 100 bps impact," said Kotak. "Provision for post-sales client support (as opposed to reversal) is another 30 bps headwind.
Tailwind is largely in the form of normalisation after 90 bps impact in Q4FY23 due to revenue reversals. We have not assumed wage revision in our model. Deal TCV (total contract value) and
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