Infosys Q2 Results Preview: Expect muted CC revenue growth; commentary on deal pipelines to be in focus

Infosys is expected to report soft numbers for the July-September quarter of the current financial year (Q2FY24) mostly because of demand slowdown in key markets.

The IT major will report its Q2 earnings on Thursday, October 12. Experts and brokerage firms expect Infosys to report a single-digit year-on-year (YoY) growth in revenue. On a quarter-on-quarter (QoQ) basis, revenue could come flat. Management commentary on deal pipelines and the ramp-up of deal wins would be in focus.

Brokerage firm Motilal Oswal Financial Services expects Infosys to report a muted revenue growth of 0.8 per cent QoQ in CC (constant currency) terms due to continued demand slowdown while the recently signed mega deals may not contribute significantly as of now.

However, the brokerage firm believes Infosy's deal TCVs (total contract values) should look attractive due to multiple mega wins recently.

According to the estimates of Motilal Oswal, Infosys' Q2 revenue may grow 5.2 per cent YoY in the Indian rupee terms. Profit after tax (PAT) can climb 3.1 per cent YoY. EBITDA margin for the quarter could come at 23.4 per cent against 24.4 per cent in the same quarter last year.

Motilal observed Infosys' operating margin largely remained stable due to weak topline growth with no wage hike this quarter.

"We would be closely monitoring the ramp-up of these wins and the formation of the deal pipeline. We expect the company to maintain its guidance on the back of healthy deal wins, which should provide strong footing in the second half," said Motilal Oswal.

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Another brokerage firm Nuvama Wealth Management believes Infosys' Q2FY24 revenue may rise 6 per cent YoY. Besides, the brokerage firm expects revenue to grow by 1.2 per cent QoQ in CC terms and 1 per cent QoQ in USD terms.

"We expect steady deal-wins and conservative commentary on the demand environment. We expect Infosys to maintain its revenue (1-3.5 per cent) and margin (20-22 per cent) guidance for FY24," said Nuvama.

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In the previous quarter, Infosys reduced its revenue guidance for FY24 but retained its operating margin forecast. In its exchange filing the company had said its solid deal pipeline and strong major deal closes placed it well for future development.

Not only Infosys, but in fact most Indian IT players may report a softer set of numbers for the second quarter of the current financial year (Q2FY24) due to prevailing headwinds in the key markets. Experts expect a marginal decline in the IT firms' EBIT margin on a year-on-year (YoY) basis as the cut in discretionary programs, the growth slowdown and the increase in costs such as travel and back-to-office expenses dent profitability.

Also Read: Earnings preview: Indian IT firms to report soft numbers in Q2FY24; revenue, profit likely to be muted

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.