Infosys Q2 Results Preview: Will Tech Giant Upgrade Its FY25 Revenue Growth Guidance? Key Factors To Look Out

Infosys Q2 Results Preview:

Broker JM Financial is expecting 10bps QoQ cross-currency tailwind for Infosys in the quarter. While it estimates USD 46mn (1% of consolidated growth) contribution from intech acquisition.

Further, JM believes that large deal ramp up and hiring in 2Q should be margin headwinds. However, sub-con optimization and positive impact of value based selling should be able to negate the headwinds.

In terms of guidance, JM expects Infosys to revise its guidance to 4%-5% YoY cc, 0% to 1% for 3Q and 4QFY25.

Meanwhile, Phillip Capital expects revenue growth of 2.6% qoq in CC on account of a) continued ramp up of large deals like in Q1, b) intech integration (c1% impact in its view) and c) continue recovery in BFSI vertical. Also, margins are expected to improve by 30bps helped by strong growth and operational efficiencies (Project Maximus).

Additionally, Phillip Capital believes that Infosys would increase FY25 growth guidance to 4-5% yoy in CC from 3-4% on strong H1 and low ask rate in H2. It expects EBIT margins guidance to stay intact at 20-22%.

In its preview note, HDFC Securities said, "Infosys's growth includes ~1pp from In-tech; the possibility of a guidance upgrade from the current 3-4% will reflect an improved outlook for H2 and/or a stronger-than-expected Q2 (similar to Q1). Improved commentary on BFSI, deal market-share gains in Communication and better hiring reflect some of the positives for the company."

Moreover, Sharekhan expects Infosys to report revenue growth of 3.2% in CC terms q-o-q with ~70bps cross-currency tailwinds, leading to a 3.9% q-o-q reported growth aided by recovery in BFSI. EBIT margin is expected to improve by ~25 bps q-o-q owing to operational efficiencies.

In Q1, the company posted 7.1% YoY growth in consolidated net profit to Rs 6,368 crore. Further, revenue in constant currency registered growth of y 2.5% YoY and 3.6% QoQ. In dollar terms, revenue was at $4,714 million, a growth of 2.1% YoY.

During the first quarter of FY25, Infosys had raised FY25 revenue growth guidance to 3%-4% in constant currency from earlier 1-3%. While operating margin guidance has been retained to 20%-22%.