Infosys, the country’s second-largest IT services company, is set to announce its financial results for the fourth quarter ended March 2024 (Q4 FY24) on Thursday, April 18. The Q4 financial results will be declared at around 3:45 pm today. Following the results announcement, a press conference will be held at around 4:30 pm and a 60-minute earnings call will take place at 6 pm.
According to analysts, Infosys is expected to post tepid Q4 numbers as its revenue is expected to fall sequentially for the second consecutive quarter or to remain flat, and its guidance for FY2024-25 is also likely to be conservative.
The company’s revenue in the March 2024 quarter may have declined sequentially due to weakness in discretionary spending and weak seasonality. Its EBIT margin is likely to have been hit by wage hike impact, visa costs and muted revenue growth, said analysts.
Revenue Growth
Brokerage firm Nomura in its note said Infosys’ revenue on constant currency (CC) is likely to have declined 1 per cent on a quarter-on-quarter basis in Q4FY24. It may be due to the continued weakness in discretionary spending and weak seasonality for Infosys.
Another brokerage firm HSBC also expects 0.2 per cent decline in revenue sequentially in CC terms. PNB Paribas and ShareKhan also expects Infosys’ revenue to fall 0.4 per cent and 0.5 per cent in the March 2024 quarter, respectively.
EBIT Margin
As far as Infosys’ EBIT (earnings before interest and tax) is concerned, Nomura expects it to be flat on a QoQ basis. Analysts said full impact of wage hike will hit in Q4 FY24 for Infosys, while it may get offset by cost cuts.
BNP Paribas in its note said Infosys’ EBIT margin is likely to have declined by 25 basis points in Q4 FY24 to 20.3 per cent due to wage hike impact, visa costs and muted revenue growth.
Revenue Guidance
Nomura said that on a full-year basis, the revised revenue growth guidance for FY24 is 1.5-2 per cent YoY with a 20-22 per cent EBIT margin. For the coming financial year, it expects Infosys to guide for 2-5 per cent YoY revenue growth in CC terms with a 20-22 per cent EBIT margin band.
According to HSBC analysts, Infosys FY25 revenue guidance is likely to be in the range of 3-5 per cent. They said large-deal ramp-up outlook in the first quarter of FY25 will be critical for full year growth trends.
BNP Paribas expects Infosys to guide 3-5 per cent YoY revenue growth in CC terms in FY25 with a margin band of 20-22 per cent.
In the previous quarter ended December 2023 (Q3 FY24), IT major Infosys had posted a fall of 7.3 per cent year-on-year in its net profit to Rs 6,106 crore for the third quarter ended December 2023 quarter. However, its revenues during October-December 2023 rose 1.3 per cent to Rs 38,821 crore, compared with Rs 38,318 crore a year ago.
Infosys’ net profit had stood at Rs 6,586 crore in the corresponding quarter last year. Infosys revised its revenue growth guidance for the ongoing financial year to 1.5-2 pc from 1-2.5 per cent estimated earlier.
Meanwhile, kickstarting the Q4FY24 earnings season, India’s largest IT services company TCS on April 12 reported a 9.1 per cent growth in its March quarter net profit at Rs 12,434 crore. In the fiscal year 2023-24, the company’s net profit grew 9 per cent to Rs 45,908 crore, as per an exchange filing.
Tata Consultancy Services’ post-tax profit during the January-March period last year stood at Rs 11,392 crore. In the March quarter, its revenue grew 3.5 per cent to Rs 61,237 crore year on year.
Its operating profit margin expanded by 1.50 per cent to 26 per cent.
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