Infosys Q4 results today: All eyes on new CEO Salil Parekh, key things to watch out for

Infosys, country's second largest software services firm, is all set to declare its March quarter results later in the day post market hours. Analysts are expecting improvement in revenues and margins in an otherwise seasonally weak quarter. All eyes will be on Infosys Chief Executive Officer Salil Parekh, who completed his first quarter in Infosys. Investors will track if he continues with company's practice of giving a full-year guidance or not. Investors will also be watchful of new deal wins and large deal renewals during the quarter as peer Tata Consultancy Services (TCS) has already announced massive deal wins.   

Edelweiss Securities estimates Infosys to post 1.4 per cent growth QoQ in constant currency, further aided 100bps by cross currency (cc) movements, implying 2.4 per cent growth in dollar terms. The brokerage expects Infosys to issue a revenue growth guidance of 6.5-8.5 per cent and maintain operating margin guidance of 23-25 per cent for FY19.

"Considering downward revision of guidance in FY18, we believe the company will be fairly conservative in issuing FY19 guidance. Margin is likely to remain stable, with currency likely to benefit 30bps QoQ," the brokerage said.

Edelweiss maintained its positive stance on Infosys anchored by strong fundamentals and attractive price, recommending buy on the stock. 

HDFC Securities also has a buy rating on the stock with a target price of Rs 1,335. 

"Senior management stability, rapid acceleration in digital, recovery in NorthAm BFSI, momentum in large accounts (top 11‐25), strong execution and geo‐diversification of delivery will support rev/EPS CAGR of 9% each over FY18‐20E. Increase earnings by ~1% and maintain BUY at 17x FY20E for TP of Rs 1,335," it pointed out in a report. 

Meanwhile, the stock has outperformed the benchmark and sectoral indices, gaining over 12 per cent year-to-date. By comparison, Nifty advanced just 0.5 per cent. During March quarter of FY18, Infy stock gained 8.6 per cent and the Nifty IT index was up 7 per cent, while the Nifty50 fell 4 per cent in Q4FY18.   

Things to watch out for:

Emkay Expects Investors to focus on:

i) Strategy update from the new CEO 

ii) Revenue guidance (We expect company to indicate revenue guidance of 5-7% YoY constant currency growth for FY19)

iii) Feedback from client budget plans

Infosys Q4FY18 (QoQ) Estimates

Source: Average brokerage estimates