As India Inc’s earnings season has started with India’s largest IT services firm TCS declaring its result on Monday, another IT major Infosys is going to announce its financial results on Wednesday. Apart from the March 2022 quarter results, the company will also give its guidance for the period going forward. Here’re important parameters the investors need to see in the results:
Revenue Growth
The company is expected to post a 26.3 year-on-year (y-o-y) jump in revenue to Rs 33,219 crore in the quarter ended March 2022, according to a report by YES Securities. Growth is expected to be broad-based across industry verticals.
Growth in PAT or Net Profit
Analysts expect a profit after tax (PAT) of Rs 6,105 crore in the fourth quarter of the financial year 2021-22, a jump of 20.3 per cent year-on-year.
Revenue Guidance
The company is going to give its revenue guidance for the quarter and the year ahead. Infosys’ FY23 revenue and margin guidance would be key to watch out for. During the previous Q3FY22 financial statement announcement, it had raised its revenue guidance to 19.5-20 per cent for the full financial year 2021-22. Earlier, it had estimated the growth at 16.5-17.5 per cent in constant currency.
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Deal Pipeline
The company’s large deal is also a key watch out for. Its large deal wins were accelerated with a total contract value (TCV) of USD 2.53 billion in the December 2022 quarter. “Factored USD revenue/EPS CAGR at 14/18% over FY22-24E led by market-share gains in large deals with momentum in the digital segment, improving relative performance in operations, strong global execution framework, strong tiering in partner ecosystem & execution track record and balance sheet strength,” said HDFC Securities in its report.
Operating Margin
The company had posted a healthy operating margin of 23.5 per cent for the December 2021 quarter, with free cash flow conversion at 92.6 per cent. It had declined 1.9 per cent year-on-year and 0.1 per cent quarter-on-quarter.
For the information sector as a whole, ICICI Securities in its report said, “The growth of Indian IT companies is expected to moderate in Q4FY22 as witnessed in Q4 quarters historically. Margins are expected to take a hit due to continued higher employee expenses. The demand environment continued to be strong led by continued deal momentum led by sectors like BFSI, insurance etc. There would be some cross-currency headwinds during the quarter, which will dampen dollar revenues, to some extent, fourth quarter.
In the December 2021 quarter, Infosys had posted an 11.8 per cent jump in the consolidated net profit to Rs 5,809 crore from Rs 5,197 crore in the corresponding quarter last year. Its revenue from operations during October-December 2021 rose 22.9 per cent y-o-y to Rs 31,867 crore, compared with Rs 25,927 crore in the year-ago period.
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