Infosys Q3 Results Preview: What to expect from the IT major today?

Management had guided for sluggishness in capital markets and weakness in European banking system which will impact banking and financial services sector.

On profitability, EBIT margins could expand by 50 -60 basis points despite weak growth and furloughs. One basis point is a hundredth of a percentage point. Improvement in margins will be led by the depreciation of rupee against USD and GBP and cost-efficiency measures. Profits could improve 4.5 percent sequentially to Rs 4,200 crore.

Infosys could look to marginally raise revenue growth guidance to 9.5 -10.5 percent vs 9-10 percent. The current guidance is seen conservative as the company needs 0.6 percent growth in Q3 and Q4 to meet upper end of the guidance. Infosys has periodically upped the revenue guidance with the firm guiding for 7.5-9.5 percent at the start of the year. FY20 margin guidance is seen unchanged at 21-23 percent. 

$ revenue up 1.5% at $3258 million vs $3210 million

Rupee revenue up 2.5% at Rs 23,190 crore vs Rs 22,629 crore

EBIT at Rs 5,180 crore vs Rs 4,912 crore

EBIT (in %) at 22.34% vs 21.7%

PAT up 4.5% at Rs 4,200 crore vs Rs 4,019 crore

Investor focus is likely to be on the outcome of investigations into whistleblower complaints — the reason behind the stock underperforming peers like TCS by 14 percent in the last three months.

Focus on banking and financial services and retail sector will be crucial to understand whether the weakness will persist for more quarters.

Deal signing in Q2 was extremely strong at $2.8 billion. The investor would wait to see if that continues.

Attrition and comments around pricing and performance of top accounts will be tracked.

Client budgets and spending in the US election year.