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From strategy to new CEO names: 5 things to watch for in Infosys Q2 results

Infosys management commentary will be keenly watched on areas such as probable names of the next chief executive officer, digitisation roadmap and deal wins in its largest market in the US

Ayan Pramanik  |  Bengaluru 

Infosys Q2 results

Infosys, India’s second-largest IT services firm, is widely expected to cut its growth forecast for the current financial year on account of a competitive business environment. The company's revenues are likely to grow between 1.5 and 2.5 per cent in constant currency terms as estimated by four brokerage firms considering wage hike impact. 



The company will announce growth strategies after co-founder Nandan Nilekani coming at the helm. Infosys management commentary will be keenly watched on areas such as probable names of the next chief executive officer, digitisation roadmap and deal wins in its largest market in the US after the "abrupt" exit of first non-founder CEO in August. 

Here are five things to watch:

Growth strategies   

Since Nilekani took charge at the Infosys board, he has tasked key members of the board – Ravi Venkatesan, D N Prahlad, and senior executives – with drawing up a growth plan for the next phase of Infosys. Nilekani, who has probably reviewed the strategy during the board meeting on Monday and Tuesday, will give an indication on whether Infosys will be able to break from the single-digit growth rates that the IT services industry is currently witnessing and grow faster by tapping newer business opportunities.



It will be important to watch out for the commentary on that. 

2) Revenue and margin forecast

The company is largely seen to be revising its forecast when it announces the results this afternoon. 

"(The) update on strategy post Nadan Nilekani joining the company and update on CEO hiring and FY18 guidance — Expect constant currency revenue growth guidance to be cut to 6.5-7.5 per cent and EBIT (earnings before interest and taxes) margin guidance to be maintained at 23-25 per cent YoY (year-on-year)," wrote Urmil Shah, IT analyst at IDBI Securities. 



3) Clarity on the Panaya investigation report

Apart from the strategy plan, which would throw light on how much Infosys will deviate from Sikka's software plus services model, the management's commentary on the investigation report pertaining to allegations over the Panaya acquisition will be keenly watched. Nilekani had said in August that he would take appropriate steps after evaluating the reports. 

4) CEO selection

Infosys' management is expected to announce the prospective or final names of the next chief executive officer. While discussions have been on for shortlisting former senior executives who grew at Infosys, analysts say it may not be an easy task to find an external leader at this point. 



5) Digital transformation and client metrics

The Indian IT industry is witnessing a paradigm shift in demand from clients with the emergence of digital technologies such as artificial intelligence, machine learning, and cloud. This has resulted in smaller deals for Infosys and its peers. The Nilekani- and interim CEO Pravin Rao-led management's digital transformation roadmap will be important to note. More clarity on client relationship and digital deals is also important. 

First Published: Tue, October 24 2017. 10:25 IST
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