Brokerage Nirmal Bang noted that Infosys's CEO had earlier suggested, in a media interaction, that the IT firm aspires to clock double-digit growth in FY22. "We need to see if there is more colour likely to be given after a series of large deal wins in recent months," it said. This brokerage sees revenue for the company rising 5.3 per cent on a year-on-year basis (3.1 per cent quarter-on-quarter) to Rs 25,172 crore in the third quarter.
It sees constant currency growth at 2.5 per cent sequentially, and dollar revenue growth at 3.1 per cent. PAT is seen climbing 18.3 per cent YoY (8.8 per cent QoQ) to Rs 5,274 crore. The company's Ebit margin is seen shrinking to 21.9 per cent from 25.3 per cent in the September quarter, and 24.4 per cent in the year-ago quarter.
Edelweiss expects Infosys to report dollar revenue growth of 5.4 per cent on a quarter-on-quarter basis, and constant currency growth of 5 per cent. It sees the company's profit rising 15.9 per cent to Rs 5,178 crore.
"Being the market leader, Infosys will be a key beneficiary of core transformation; higher cloud adoption; and digital adoption. Moreover, it is a direct beneficiary of the persistent market share loss of key players such as Capgemini and Cognizant. We believe the company would restate its FY21 guidance higher from 2–3 per cent earlier to 3–5 per cent in Q3FY21. We also expect Infosys to post modest margin expansion of about 50 bps QoQ, enabled by strong volume growth and better cost control and efficient execution," Edelweiss said.
The brokerage said that investors should watch out for the total contract value (TCV) for the quarter; deal momentum, tenure and pricing, and the management's commentary on segments, particularly retail, travel and product engineering services.
Analysts said they would also like to hear from the company on deal momentum in the Hi-Tech vertical. The movement in attrition could also be a key variable, they said.
"We remain constructive on Infosys in the medium to long term with its ability to engage with large clients for their large transformation programs; we expect Infosys medium to long term growth to be similar to TCS and expect payout ratio to improve gradually. We value Infosys at 26 times forward PE on FY23e EPS which at 5 per cent discount to our valuation multiple to TCS on lower ROEs," Antique Stock Broking said.
This brokerage forecast the IT major's constant currency revenue to grow 3.6 per cent in the December quarter sequentially, and 4.0 per cent in dollar terms, with a 40-basis-point cross-currency tailwind.
"We expect a large deal pipeline remains strong as clients look at accelerating digital transformation programs and continuing their focus on automation and cost efficiency," it said.
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