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Infosys Q1 preview: Profit may grow 24-30%; all eyes on upgrade in FY22 guidance

NEW DELHI: is likely to clock a 24-30 per cent year-on-year growth in net profit on a 17-18 per cent plus growth in sales. The second-largest IT major is seen upping its FY22 sales growth forecast to 13-15 per cent from 12-14 per cent on a constant currency basis. The Bengaluru-based firm may stick to its margin guidance at 22-24 per cent, analysts said.

On a sequential basis,

expects the IT firm to report a 4 per cent sales growth in constant currency (CC) terms and a similar growth in dollar revenue, as it has no cross-currency impact.

EBIT margin is seen improving by 20 basis points sequentially on the back of revenue growth and other operating efficiencies, it said. The brokerage sees profit rising 28.3 per cent YoY to Rs 5,432.60 crore in the June quarter on a 17 per cent rise in net sales to Rs 27,711.70 crore. Ebitda margin is seen at 27.8 per cent against 27.6 per cent in the March quarter and 25.9 per cent in the year-ago quarter.

“We expect the company to revise its full-year revenue growth guidance upward to 13-15 per cent YoY in constant currency terms, while retaining 22-24 per cent EBIT margin guidance,” it said.

Phillip Capital said it expects sequential dollar revenue growth at 4 per cent and margins to contact 80 bps QoQ. This brokerage pegs Infosys’ profit at Rs 5,262 crore, up 23.6 per cent YoY. It sees rupee revenue at Rs 27,697 crore, up 17 per cent YoY. Prabhudas Lilladher’s profit projection of Rs 5,518.50 crore suggests a 30.4 per cent annual growth. It sees revenues rising 17.5 per cent YoY to Rs 27,805 crore.

“We expect strong growth of 4.2 per cent QoQ constant currency profit growth, which will be led by strong broad-based growth across verticals, ramp-up of large deals, and seasonal strength. We expect margins to decline by 34 bps QoQ driven by potential higher sub-contracting costs due to strong demand momentum and wage pressures due to higher attrition. We expect utilisation level to come down this quarter from an all-time high level of 87.7 per cent in Q4FY21,” it said.

expects the deal momentum to remain healthy, as clients continue to fast-track their digital and cloud journey. We expect margins to remain flat QoQ, with healthy growth offsetting the impact of large deal-related transition costs and normalisation of utilisation & offshore mix.

It said management commentary on the deal pipeline and pace of deal conversion, outlook on the retail and communications vertical, ramp-up of the Daimler deal and potential margin tailwinds in H2FY22 will be keenly followed.

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