Infosys to announce Q3 results today: Here's what analysts expect

IT major Infosys will release its financial results for third quarter of FY19 on Friday. While Q3 is seasonally weak for IT companies due to furloughs, healthy deal wins in H1FY19 and increasing contribution from the digital segment are expected to keep revenue growth steady for Infosys and other top IT vendors. Deal ramp ups are likely to support the company's growth. 

Infosys, the country's second largest IT services company, will consider share buyback and a special dividend for shareholders as part of its capital allocation policy in the board meeting.

Most brokerages expect the company's revenue in constant currency (CC) terms to come in between 1.3-2.2 per cent during the quarter under review. "We expect revenues to grow 2 per cent QoQ in cc terms, impacted 50 basis points (bps) due to cross currency headwinds (US dollar growth 1.5 per cent QoQ)," said Edelweiss Securities. 

Net profit is expected to rise 5.2 per cent on QoQ basis and 16.9 per cent on YoY basis, the brokerage says. Prabhudas Lilladher sees 4.4 per cent QoQ rise in its adjusted PAT at Rs 4,290 crore. The company had reported a net profit of Rs 4,110 crore for the September quarter of FY19. It had reported 3.7 per cent year-on-year (y-o-y) growth in consolidated net profit at Rs 3,612 crore for the quarter ended June 30, 2018. 

Analysts at ICICIdirect see CC revenues to grow 2.2 per cent QoQ with cross currency impact of 50 bps to dollar growth.

Cross-currency headwind is expected to be around 60 bps. Margin performance is expected to be flat on QoQ basis owing to significant investment in digital capabilities and sales resources, say analysts at Sharekhan in earnings preview.  

US$ revenues are expected to grow 1.7 per cent QoQ to $2,969 million led by healthy deal wins in H1FY19 and contribution from Fluido acquisition ($6.3 million). Revenue in rupee terms may grow 3.8 per cent to Rs 21,400 crore, says ICICIdirect. 

EBIT margins may expand 10 bps QoQ to 23.8 per cent primarily owing to rupee tailwind partly offset by investments. Investors are likley to keep an eye on Retail and BFSI trajectory, deal pipeline and conversion and steps to counter attrition at key positions, the brokerage says. 

"We expect Infosys to maintain its guidance for 6-8 per cent cc revenue growth for FY19E and EBIT margin guidance of 22-24 per cent for FY19E," said Prabhudas Lilladher.