IT giant Infosys is set to release its third-quarter (Q3 FY2025) results later today, after market hours (post 3:30 PM). As the second-largest IT company in India, Infosys has not provided any updates regarding a dividend announcement for Q3. Hence, it is unlikely that a dividend will be declared alongside the Q3 results.

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Infosys (Q3FY25) is expected to report a 0.9 per cent growth in CC revenues, reaching Rs 41,370 crore, up from Rs 40,986 crore in Q2FY25. Its dollar revenue is anticipated to rise by 0.3 per cent, from $489.4 million to $491.1 million. The company’s EBIT is projected to increase by 1.2 per cent, totalling Rs 8,750 crore, compared to Rs 8,649 crore in the previous quarter. With a margin improvement to 21.2 per cent from 21.1 per cent, PAT is expected to rise 4.1 per cent, hitting Rs 6,770 crore, up from Rs 6,506 crore.

Zee Business research teams estimate these figures, and they anticipate that the INR depreciation will help margins improve. The deal TCV is expected to remain strong. Revenue guidance for FY25E is projected to be upgraded to 4.0-4.75 per cent YoY CC growth, with EBIT margin guidance remaining intact at 20-22 per cent. These predictions are based on the latest insights for Infosys' Q3 earnings release later today.

Margins and cost optimization

Earnings before interest and tax (EBIT) margins are projected at 21.3-21.5 per cent, consistent with Q2’s 21.1 per cent. While Motilal Oswal Financial Services (MOFSL) forecasts a 30-basis-point (bps) margin dip due to furloughs and fewer working days, pricing gains and cost efficiencies from “Project Maximus” are expected to offset these challenges. Conversely, Emkay Global Financial Services anticipates a 20-bps margin expansion owing to operating efficiencies and currency tailwinds.

Deal activity and TCV trends

During the quarter, Infosys secured contracts with Kardex, StarHub, and RheinEnergie. However, deal wins for the broader IT sector remain subdued due to weak discretionary spending and the absence of mega deals. Large deal total contract value (TCV) for Infosys declined from $4.1 billion in Q1FY25 to $2.4 billion in Q2FY25. Analysts expect cost takeout and vendor consolidation deals to dominate the pipeline.

Hiring and attrition updates

Infosys’ headcount rose by 2,456 to 3,17,788 in Q3FY25, compared to 3,15,332 in Q2. Voluntary attrition increased slightly to 12.9 per cent, up from 12.7 per cent in Q1FY25, but improved year-on-year from 14.6 per cent in Q2FY24. Wage hikes originally scheduled for Q3 may now be deferred to Q4.

Growth guidance outlook

Analysts suggest that Infosys could revise its growth guidance to 4-4.5 per cent in cc terms, marking the eighth adjustment in nine quarters. This comes amid a challenging demand environment, although opportunities in generative AI and cost-optimization initiatives may provide catalysts for recovery.