Infosys Q1FY20 Result Expectations

We expect attention to be on 1) traction in large deal and pipeline, 2) comments on spending trends/IT budgets of US banks, and 3) comments on margin levers and drags.

Jul 12, 2019 08:07 IST India Infoline News Service

Infosys
Infosys, India’s second-largest IT services provider is set to post its Q1FY20 results on July 12. Unlike other large peers, Infosys is expected to post stronger growth of 2.3% qoq in constant currency terms with cross currency headwinds of ~30bps resulting in USD revenue growth of 2.0%.

The revenue growth would be aided by large deal ramp-ups and one-month revenue contribution from the Stater acquisition. EBIT margin is expected to contract by 160bps qoq to 19.8% owing to costs related to deal ramp-ups, wage hikes for 85% of employees, visa costs, and Rupee appreciations, which may be partially offset by higher utilizations.

We expect attention to be on 1) traction in large deal and pipeline, 2) comments on spending trends/IT budgets of US banks, and 3) comments on margin levers and drags.

Rs Cr 1QFY20E 4QFY19 1QFY19 QoQ (%) YoY (%)
Revenue (US$ m) 3,121 3,060 2,831 2.0 10.2
Revenue 21,712 21,539 19,128 0.8 13.5
EBIT 4,309 4,618 4,537 (6.7) (5.0)
EBIT margin (%) 19.8 21.4 23.7 (160)bps (387)bps
PAT 3,605 4,078 3,882 (11.6) (7.1)

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