Lower Growth Expected
Infosys, the Indian IT giant, is expected to report lower single-digit revenue growth for the January-March quarter (Q4FY24) compared to the same period last year. This projection comes amidst concerns about weakening discretionary spending and reduced contributions from large deals.
Analysts predict a revenue increase of 2-4% year-on-year (YoY) for Infosys, translating to a range of Rs 38,432 crore to Rs 38,945 crore. The net profit is also expected to fall within a range of Rs 6,102 crore to Rs 6,442 crore, representing a decline of 0.4% to 5% YoY.
The full impact of wage hikes announced in December 2022 is anticipated to affect Infosys' Q4FY24 earnings. However, cost-cutting measures might mitigate this impact to some extent.
## Key Factors to Watch
Performance in impacted verticals: The performance of Infosys in sectors like BFSI, retail, hi-tech, and telecom will be crucial, particularly regarding FY25 revenue growth and margin outlook.
The potential impact of macro headwinds on demand and the company's commentary on core markets like the US and Europe will be closely analyzed.
The progress of large-deal ramp-up in the first quarter of FY25 will be critical for determining full-year growth trends.
## Analyst Predictions
Nomura: Expects a 1% decline in constant currency (CC) revenue QoQ due to weak discretionary spending and seasonality.
Anticipates a 0.2% decline in CC revenue QoQ and an 80 basis point expansion in margins.
Predicts a 0.4% decline in CC revenue QoQ and a 25 basis point decline in EBIT margin to 20.3%.
Forecasts a marginal 0.3% increase in revenue QoQ and a slight expansion in margins.
Expects a 0.5% decline in CC revenue and flat EBIT margins.
## Conclusion
Infosys' Q4FY24 earnings are expected to reflect the challenging market conditions and the impact of wage hikes. However, the company's performance in key verticals, its ability to mitigate cost pressures, and the progress of large-deal ramp-up will be crucial factors to watch for future growth prospects.