Street eyes upward revision in Infy's FY14 guidance

Company had pegged FY14 revenue growth at 6-10% earlier, which was welcomed by investors

Taking hope from optimistic management commentary for the past two months and signs of uptick in demand, most analysts are hopeful that Infosys may raise its revenue guidance for FY14. At the beginning of the fiscal, Infosys had given a guidance 6-10% in revenues growth for FY14.

"At the lower end of the guidance shared by Infosys, the company was expecting a decline in revenue for Q2, Q3 and Q4. But there is no reason for us to believe that Infosys would see a fall in revenue in the reporting quarter (July-September). So we are hoping that there will be a meaningful upward revision in the guidance by Infosys," a Mumbai-based analyst with a foreign brokerage said.

Even though Infosys' earlier guidance for FY14, was lower than industry body NASSCOM's estimate of 11-14% growth for the sector, it was welcomed by investors. Infosys' shares had risen 15% to a 3-month high on the day of announcement. Any upward revision in guidance by Infosys on October 11, 2013, when it announces its July-September quarter earning may set an optimistic mood for the entire sector, analysts said.

"We expect Infosys to tighten its FY14 guidance by raising the lower end to 9% growth and marginally increasing the top end," Religare Research said in a pre-earnings note.

Most analysts are hopeful that the company will post an at least 3% sequential growth in revenue for the July-September quarter.

"If we assume they do 3% sequential growth this quarter, then in the subsequent two quarters of this financial year even if their growth is as low as 0-2%, Infosys' will post higher growth than its current guidance," another analyst said.

Credit Suisse also expects Infosys to raise its FY14 guidance, but the brokerage firm said that it is still of the view that the company remains amid uncertainties.

"The company's order flows appear to have improved through the quarter (July-September); however, it has lost key personnel. The result and outlook could provide clarity on the sustainability of a revenue pick-up," Credit Suisse said in a note.