In the first quarter the company's profit after tax beat estimates and came in at Rs 2374 crores, against consensus estimates of around Rs 2300 crores.
But, that was not all. The dollar revenue guidance of the company of around 7-10% did not change and analysts had expected that the company would lower the same. This came as a pleasant surprise and the share price closed sharply higher on the day of its Q1 FY 2014 results.
The room for disappointment from Infosys will be limited when it declares its Q2 FY 2014 results on Oct 11. The share price has rallied almost 30 per cent this year on the back of very high expectations, that the economic recovery in the US would boost financial performance and Narayana Murthy's return would create the old magic at Infosys.
Also, the falling rupee has boosted sentiments further. The share price is going into the earnings on a bullish note and sharp rally in the last few months. Therefore, any disappointment could see a sharp fall in the share price.
Investors would closely watch for margins, which are likely to come under some pressure, after the recent salary hike. Also, if the company gives a dollar revenue guidance that would be closely watched.
Management commentary would be crucial, given that there are signs of recovery in its key markets of US and Europe.
All in all, investors are expecting good numbers and buoyant management commentary. Even a slight disappointment may not go down well with the markets and could impact stock prices of even HCL and TCS.
In fact, there has been a craze for stocks from the IT sector, with TCS and HCL Tech hitting lifetime highs recently. It's now time to see if IT companies deliver based on the very high expectations.