Infosys Q3 Results Preview: Upper end of revenue growth guidance may be cut

The company undertook wage hikes which took effect on November 1, 2023, will impact margins by 80 basis points. This was partly offset by a weaker rupee.

Similar to TCS, Infosys is also likely to report muted deal wins. Brokerage firm Kotak Institutional Equities are estimating a Total Contract Value of $2.5 billion for Infosys in the December quarter, compared to the $7.7 billion worth of deals it won in the September quarter.

However, the number is in-line with the four-quarter average of $2.6 billion.

Infosys is likely to cut the upper end of its guidance yet again, after making a similar move in the September quarter. The company is likely to narrow the financial year 2024 revenue growth guidance band to 1% to 2% from the earlier 1% to 2.5%. In case that happens, this will be the third consecutive guidance cut by the company.

At the start of financial year 2024, Infosys had guided for full year revenue to grow between 4% and 7% in constant currency terms. This was earlier reduced to 1% to 3.5% earlier, before the latest cut that came in September.

However, the company is likely to maintain its EBIT margin guidance between 20% and 22% for the year.

The street will keenly focus on senior management attrition after multiple departures from the senior leadership in the recent past.

Another keen factor to look forward to is any particular commentary on the recent termination of the $1.5 billion MoU from a global client. The street would want to know what led to the termination of a contract of such magnitude.

Infosys management may also shed some light on some underperforming sectors and the current demand revival prospects going forward.

Shares of Infosys were the second-worst performer on the Nifty IT index during the October-December period, gaining 7.5%, in-line with TCS but underperforming the Nifty IT index, which gained 12%.