9, December, 2023
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Infosys Q2 2023 Financial Results: What to Expect

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Infosys, one of India’s leading IT companies, is set to unveil its financial results for the second quarter of 2023 after market hours, scheduled after 3:30 PM. Market analysts are anticipating single-digit growth in both profit and revenue for the company.

According to Motilal Oswal Financial Services, Infosys is expected to report a modest revenue growth of 0.8 percent QoQ in constant currency terms, primarily due to a continued demand slowdown, despite recently securing substantial mega deals. These mega deals may not make a significant contribution in the short term, but the total contract values (TCVs) for Infosys should appear promising thanks to multiple recent big wins.

In terms of Indian rupee revenue, Infosys’ Q2 revenue is projected to grow by 5.2 percent YoY. Profit after tax (PAT) may increase by 3.1 percent YoY, and the EBITDA margin for the quarter could be approximately 23.4 percent, compared to 24.4 percent in the same quarter the previous year.

Motilal Oswal stated, “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 a strong footing in the second half.”

IIFL Securities, another brokerage firm, predicts Infosys to post a 1.3 percent constant currency QoQ revenue growth. Despite subdued volumes and sluggish discretionary spending, profit is expected to rise by 5.9 percent YoY to INR 6,375 crore, with a 5.5 percent increase in sales at INR 38,564 crore. The EBIT margin is estimated at 21 percent.

“Deal momentum further accelerated, given announcements of mega deals during the quarter. We expect margins to expand 20 bps QoQ, as wage hikes have been delayed, potentially to Q3. Infosys should maintain FY24 guidance of 1-3.5 percent constant currency YoY revenue growth and 20-22 percent EBIT margin,” noted the domestic brokerage.

Kotak Institutional Securities is looking forward to a total contract value (TCV) of $5.5-6 billion from Infosys, surpassing the last eight-quarter average of $2.4 billion. The firm believes that deal flow has stabilized, with a shift from short-tenured programs powered by discretionary spending to larger programs driven by cost take-outs, which typically have longer sales cycles.

Emkay Global expects profit to rise by 4.1 percent YoY to INR 6,267 crore, accompanied by a 5.4 percent rise in sales at INR 38,517 crore. Investors will be paying close attention to commentary on the effective date of wage hikes, the flow of smaller deals, discretionary spending, and the potential for growth in the second half of FY24.

As Infosys unveils its Q2 results, the industry will be keen to see how it performs in the evolving landscape of the IT sector.

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