Infosys, a tech giant backed by philanthropist Narayana Murthy, is going to announce its October - December 2024 quarterly earnings report for FY25. Ahead of Q3, Infosys share price traded volatile and in red. In the third quarter, Infosys large deal TCV is expected to be under pressure year-on-year, however, experts believe the company may raise its FY25 guidance. EBIT margins are seen to improve with mild growth in revenue likely.
Infosys Share Price:
At the time of writing, Infosys stock price traded at Rs 1938.75 apiece, which was its intraday low as well on BSE. The stock was down by nearly a per cent. While its market cap stood at Rs 8,03,817.03 crore.
Despite the latest pullback, Infosys stock was still closer to its 52-week high of Rs 2,006.80 apiece and has significantly jumped from its 52-week low of Rs 1,359.10 apiece.
Infosys Q3 Results Preview:
As per the regulatory filing, the IT player said that it will announce results for the third quarter ended December 31, 2024, on Thursday, January 16, 2025.
In its preview report, IndSec said, expects cc qoq growth of +0.2% to +0.8% on account of 1) Higher revenues from the sale of TP service delivery items 2) Demand improvement in Financial services 3) Large deal ramp-ups. This is expected to be offset by cross-currency headwinds & furloughs.
Further, IndSec believes Infosys' EBIT margins are set to improve marginally by 10bps qoq, while large deal TCV is expected to be around $3bn. Guidance is expected to be raised in 3Q to 4.5%-4.75% from 3.75%-4.5% in 2Q.
Moreover, in its preview note, Kotak Institutional Equities said, "We forecast sequential revenue growth of 0.7%, led by higher revenues from the sale of third party items for service delivery to clients, offset by furloughs. We expect stable EBIT margins of 21.2%. There are no particular headwinds or tailwinds in the quarter. We expect a large-deal TCV of US$3 bn, up qoq but down yoy. The focus will be on the ACV of deal wins. We expect Infosys to raise FY2025E revenue growth guidance to 4.5-4.75% from 3.75-4.5% earlier."
Kotak's note added, "The guidance implies a 0.7% decline at the lower end and +0.2% at the upper end of the guidance band. We expect the company to retain the 20-22% EBIT margin guidance band.
Key focus area for investors in Infosys Q3 are --- : (1) the state of discretionary spending across verticals, especially in financial services, (2) the outcome of the annual budgeting exercise of clients, (3) senior management attrition, (4) margin levers and wage hike announcement cycle and (5) composition of revenues, i.e., revenues from the sale of third-party items, as per Kotak's note.
During Q2FY25, Infosys reported a consolidated net profit after minority interest, of Rs 6,506 crore registering a growth of 4.7% YoY and 2.2% QoQ. Consolidated revenue surged by 5.1% YoY and 4.2% QoQ to Rs 40,986 crore. While operating margin for Q2 was at 21.1%. Free cash flow for Q2 was at $839 million, growing 25.2% year on year. TCV of large deal wins was $2.4 billion, 41% being net new. Overall, its constant currency revenue was up by 3.3% YoY and 3.1% QoQ in Q2FY25. While operating margins dipped by 0.1% YoY and were flat sequentially to 21.1%.
In Q2 announcement, that time for FY25, Infosys raised its revenue growth guidance in constant currency to 3.75% to 4.5% from its earlier target of 3-4%. While operating margin guidance was retained at 20-22%.
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