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Published: Jan 10, 2023
Updated: Jan 10, 2023

Infosys Q3 Results Preview: All Eyes on the Blue-Eyed Boy as TCS Disappoints with its Results

Infosys Q3 results to be released on 12th January

After the disappointment of Tata Consultancy Services (TCS) failing to meet Street expectations, all eyes are now on Infosys' Q3 results for the October-December period, set to be released on January 12th. The once IT bellwether is expected to report a 2.8% quarter-on-quarter growth in revenue while net profit is expected to increase 6.5% quarter-on-quarter.

What are the Expected Results:

Consolidated revenue is forecasted to come in at Rs 37,613 crore, registering 18% year-on-year growth, while the consolidated profit after tax is expected to increase 10.5% year-on-year to Rs 6,418 crore.

Analysts expect revenue growth in constant currency terms to be 1.1% quarter-on-quarter. “High furloughs and lack of large deal kicker, unlike previous two years, will result in muted growth,” said analysts from Kotak Institutional Equities.

Stable Margins:

Brokerages are largely of the view that EBIT (Earnings Before Interest and Tax) margins will remain stable, with a modest 20 basis point expansion quarter-on-quarter to 21.70%. Margin expansion that would have come on the back of rupee depreciation will be partially offset by furloughs, noted Investec Securities. Attrition is set to moderate further as supply-side pressures ease, it added.

TCV and New Deals show a decline on QoQ basis:

Total contract value (TCV) and new deal wins of the company will be keenly watched. For Infosys, analysts are forecasting TCV deals of $2 billion, reflecting a quarter-on-quarter decline. The company’s large TCV deal wins stood at $2.7 billion in Q2FY23, the highest in seven quarters.

Guidance remains positive:

While these numbers may seem muted when compared to previous quarters, analysts believe the management will retain its revenue and margin guidance for the FY23 period. However, investors should also keep an eye on other factors such as project delays, updates on client conversations and the demand environment in various industries.