Infosys may see positive impact on margin by 40-50 bps in Q3

InfosysThe third-quarter earnings season of the $108-billion Indian IT-ITeS industry will kick off on January 10 with Infosys declaring its results.

Infosys, which undertook a cost-optimisation drive including streamlining its onsite workforce in the last few months, is expected to see a positive impact on its operating margin by 40-50 basis points (bps) during the October-December stretch.

The third-quarter earnings season of the $108-billion Indian IT-ITeS industry will kick off on January 10 with Infosys declaring its results. The overall expectations are muted as the December quarter is a seasonally weak period due to the holiday season, though brokerage houses believe that the IT-services exporter is on track to meet its full-year dollar revenue guidance.

"It will be easy for them to achieve the dollar revenue guidance of 10% growth even if the revenue remains flat for Q3 and Q4. So beating the guidance and achieving 11-11.5% is easily achievable. If the outlook goes beyond 11.5%, it will be a positive surprise," said Ankita Somani, IT analyst with Angel Broking.

For FY14, Infosys expects its dollar-revenue growth in the range of 9-10%. The IT firm upgraded its full-year guidance during the September-quarter results from its earlier estimate of 6-10% this fiscal.

According to Sanjeev Hota, assistant vice-president, IT research, Sharekhan, the IT firm's revenue growth during the October-December period is projected to be muted. "The third quarter is relatively a soft period. We expect the revenue growth rate to be lower than Q2 but Infosys is expected to post cross-currency gain of 60-70 bps in Q3." The company has posted a cross-currency loss of 40 bps in Q2.

During the second-quarter ended September, Infosys posted a dollar-revenue growth of 3.8%. According to Somani, the Bangalore-based IT firm is expected to grow its dollar revenue at 2-2.5%. "The growth will still be led by TCS and HCL Technologies while Infosys and Wipro are only expected to follow them for the current quarter as well," she added.

... contd.

Please read our terms of use before posting comments
TERMS OF USE: The views, opinions and comments posted are your, and are not endorsed by this website. You shall be solely responsible for the comment posted here. The website reserves the right to delete, reject, or otherwise remove any views, opinions and comments posted or part thereof. You shall ensure that the comment is not inflammatory, abusive, derogatory, defamatory &/or obscene, or contain pornographic matter and/or does not constitute hate mail, or violate privacy of any person (s) or breach confidentiality or otherwise is illegal, immoral or contrary to public policy. Nor should it contain anything infringing copyright &/or intellectual property rights of any person(s).
comments powered by Disqus