Infosys is all set to announce its Q3 report on Thursday, January 11, and the earnings and revenue of the company are expected to be subdued in the last quarter. The second largest IT firm in India is expected to report a fall in margins as well.
For the quarter that ended on December 31, 2023, it is likely that Infosys will report a fall in revenue amid a drop in the earnings over the last year. This comes as the IT sector remains in a lull, with a slowdown in the financial growth of most big companies.
It is expected that the overall revenue in the IT sector will witness a drop due to a sudden drop in demand amid high furloughs and increasing reliance on artificial intelligence. Many firms are witnessing a hiring freeze, with some cutting jobs.
However, better utilisation, lower sub-con expenses and INR depreciation are some factors that can help out Infosys in its Q3 reports. The company is expected to report a 1.16 percent drop in revenue for the last quarter.
In USD terms, Infosys is expected to see its revenue drop to $4,642 million from $4,718 million in Q2FY24. Meanwhile in terms of INR, the revenue is expected to fall 0.86% to ₹38,657 crore from ₹38,994 crore.
Meanwhile, the net profit of Infosys is expected to be ₹6,172 crore till December 2023, recording a drop of 0.64 percent. In the quarter ending in September 2023, Infosys reported a profit of ₹6,212 crore.
Infosys Q3 results: What to watch out for
While the revenue and profits are expected to take a hit for the third quarter, Infosys is expected to record a decline in the EBIT margins, likely to be in the 72-100 bps range. The growth guidance of the firm also stands reduced, dropping to 1-2.5 percent in the second quarter.
Further, large deal Total Contract Value(TCV) stood at $7.7 billion in Q2 compared to $2.3 billion in Q1. This was the highest TCV recorded by the company in a quarter yet. Since Q3 did not see any major deal signings, the TCV is expected to show a small drop.
The Q3 reports will also show management commentary on the impact of salary hiked and performance bonuses on TCV, margins, pricing scenario and more.