Infosys - Q2FY13 Result Preview - Way2Wealth

How The Quarter Looks Like?

Revenue Growth Is Expected To Recover

Infosys is expected to register a decent sequential topline growth this time (as compared to its last two-three quarters performance) as renewed management focus would boost volume and lower base of the previous quarter backed by one time revenue reversal impact would philip the growth. We believe, the company would register 2.9% sequential growth in USD term topline backed by 3.5% volume growth partially negated by 60bps pressure on average realization.

No Wage Hike & Joining Deferment Would Boost Margin

Infosys is expected to register better margin performance as compared its peers as no wage hike and deferment in fresher joining would aid margin partially. We believe, operating margin would reach to 28.94% in Q2FY13 against 28.01% in the previous quarter. On the bottom line Infosys could gain better from hedging gains given substantial reduction in forward premiums on hedges over the last quarter and the company's accounting policy of marking to market all hedging gains/losses every quarter and taking it to the P&L account.

Topline Guidance To Retain; EPS Guidance Cut Expected

We expect, Infosys management to retain its FY13 revenue guidance to atleast 5% on an organic basis and there is a possibility of improving topline guidance by 1.2% - 1.5% to account for LOADSTONE revenue. But, the company is expected to cut the EPS guidance on INR appreciation. We believe, there is a high possibility of management taking wage hike decision in Q3 as growth comes in line with guidance and this would put further pressure on the bottomline.

Source : Equity Bulls

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