IT major Infosys may announce share buyback along with Q2 results
1 min read 30 Sep 2022, 11:04 AM ISTIT major Infosys' Q2 results is expected to be announced on Thursday, October 13, 2022
PremiumIndian IT major Infosys could announce a share buyback along with its earnings for the second quarter ended September 2022 for the current fiscal (Q2 FY23), believe analysts at global brokerage Jefferies. Infosys' Q2 results is scheduled to be announced on Thursday, October 13, 2022.
“We expect aggregate revenue growth of 3.6% QoQ cc for IT companies under our coverage, in line with last quarter, driven by deal ramp-ups. Among large IT firms, we expect Infosys to deliver the highest organic growth (+4% QoQcc). We estimate Wipro's growth to be similar to Infosys's, aided by 100 bps inorganic contribution from Rizing/Convergence," said Jefferies in a note on Indian IT companies' Q2 preview.
During 2QFY23, it expects aggregate revenues for the sector to be steady at 3.6% QoQ in constant currency (cc) terms, led by Infosys and Coforge. While wage pressures persist, an improving pyramid, operating leverage, and pricing will help a slight recovery in margins from the previous quarter.
“Expect Coforge and TCS to witness the highest margin expansion. Focus will be on demand outlook, nature of deals, pricing and attrition trends, and potential buyback for Infosys. Remain cautious on the sector," Jefferies added.
A share buyback, also known as share repurchase, is a corporate action to buy back its own outstanding shares from its existing shareholders usually at a premium to the prevailing market price. It can be an alternative tax-efficient way to return money to shareholders. Share buybacks reduce the number of shares in circulation, which can increase the share value and the earnings per share (EPS).
“We expect Ebit margins to expand by 30bps QoQ, driven by pyramiding, operating leverage and pricing benefits, amidst supply side pressures, higher costs and continued investments in growth. We expect Infosys to retain its 14-16% YoYcc revenue growth guidance and 21-23% margin guidance," the note said.
The second largest Indian IT service provider Infosys' shares have declined more than 26% in 2022 (YTD) so far amid IT stocks' underperformance as compared to about 4% fall in benchmark BSE Sensex during the period.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
