Infosys is all set to report its December quarter results on Thursday and if we were to go by analyst projections, the second largest IT firm is likely to beat TCS’ December quarter results in terms of profitability. Infosys is seen reporting revenue growth in line with TCS’ 19 per cent sales growth. It may, however, lag TCS in terms of operating margin, brokerage projections suggest.
Profit
Earlier this week, TCS reported a 11 per cent year-on-year (YoY) jump in profit at Rs 10,846 crore for the December quarter compared with Rs 9,769 crore in the corresponding quarter last year.
Sharekhan sees profit for Infosys rising 13 per cent YoY to Rs 6,563 crore compared with Rs 5,809 crore in the year-ago quarter. PhillipCapital pegs Infosys profit at Rs 6,657 crore, up 14.6 per cent YoY. Nirmal Bang, which has a sell rating on the IT sector, is expecting profit for the Salil Parekh-led firm at Rs 6,546.70 crore, up 12.7 per cent. Motilal oswal sees profit for Infosys rising 11.2 per cent YoY to Rs 6,500 crore.
Sales
TCS reported a 19.10 per cent YoY rise in revenues at Rs 58,229 crore compared with Rs 48,885 crore in the same quarter last year. Sharekhan sees revenue for Infosys rising 19.6 per cent YoY at Rs 38,107 crore from Rs 31,867 crore in the same quarter last year. PhillipCapital sees Infosys revenues at Rs 37,935 crore, up 19 per cent. Nirmal Bang has a similar estimate. This brokerage is expecting Infosys revenues at Rs 37,992 crore, up 19.2 per cent.
Margin
Operating margin for TCS stood at 24.5 per cent in the third quarter, down 0.5 per cent YoY. For Infosys, ICICIdirect sees Ebit margin at 21.9 per cent against 21.5 per cent in September quarter and 23.5 per cent in the year-ago quarter.
Infosys margin is seen lagging behind at 22.7 per cent, down 149 basis points, as per Sharekhan estimates. PhillipCapital estimates Infosys margin at 21.6 per cent. Nirmal Bang sees Infosys margin at 23.5 per cent.
Order wins
Order wins for TCS came in at $7.8 billion for the December quarter. Nirmal Bang pegs Infosys deal wins at $2 billion, reflecting a sequential decline after a record September quarter (which was highest in seven quarters).
Results timing
As per a Infosys press release, its December quarter earnings would be out at around 3.45 pm Indian Standard Time (IST) on Tuesday. All eyes would be on whether the second largest IT major retains its 15-16 per cent revenue growth guidance and EBIT margin guidance band of 21-23 per cent.
Infosys’ leadership team will be part of a common press conference at 4:30 pm, the same day. The participating executives will address questions from the media during this interaction, which will be streamed live on the Investor Relations section of Infosys website, following which it will be archived.
What to watch out?
Analysts said Infosys is likely to retain its FY23 guidance of 15-16 per cent CC YoY revenue growth and also the EBIT margin guidance of 21-22 per cent. Investors would keenly follow management commentary on any deferral of projects due to macro uncertainties. They would also watch out for management commentary on demand environment in BFSI, manufacturing, retail, and communications, analysts said.
Also Read: Infosys Q3 results timing, press conference, earnings call & more
