Infosys Q3 earnings to be out today, here’s what to expect

IT bellwether Infosys is all set to release its third quarter results today, the first earnings announcement under the new CEO Salil Parekh.
The IT sector as a whole is likely to see a stunted growth in the third quarter due to seasonal weakness. However, absence of any significant cross-currency headwind is expected to support the top line growth and margins for tier-1 companies, say brokerages.
Brokerage firm KR Choksey Shares and Securities believes that Infosys may report a 1.4 per cent growth in dollar revenues for the third quarter of 2017-18 with a cross-currency tailwind of 14 bps. It further expects Infosys to report muted growth owing to seasonal weakness and a lower demand from the BFSI and retail segment.
“We expect the EBITDA margin to decline by 20 bps on the back of increase in cost of services,” KR Choksey Shares and Securities said.
Markets are likely to watch the road map set by the newly-appointed CEO Parekh to handle the challenging IT service business and any changes to the guidance set by his predecessor. One should also focus on figures on hiring in the US, client budgets and deal wins.
Edelweiss Securities sees a 2.6 per cent drop in crore PAT (profit after tax) on a quarter-on-quarter (QoQ) basis in October-December. However, it sees a rise of 0.3 per cent and 1.9 per cent QoQ in EBITDA and revenue, respectively, during the quarter under review.
EBITDA margin may see a contraction of 50 basis points on a quarterly basis on account of wage hikes for mid-level and onsite employees, ramping up of the US workforce and seasonal weaknesses.