Infosys (BUY) - Quarterly estimates - ICICISecurities

- Expect consolidated USD revenue to grow 1.1% QoQ (0.7% QoQ growth adjusted for one off revenue reversal at Lodestone in Q4FY13) to USD1,960mn in Q1FY14 with ~60bps cross-currency impact QoQ. We expect Lodestone to contribute ~USD60mn to revenues in Q1FY14.

- EBIT margin likely to decline 80bps QoQ to 22.8% due to i) one month incremental impact of onsite wage hikes extended in Feb'2013 (~20bps), ii) impact of the wage increases for Sales employees effective May'2013 (~25bps impact), iii) visa costs (~100bps impact), iv) impact of ~10,000 promotions given in Q4FY13 and v) likely decline in like-to-like pricing with the key offset being currency depreciation (Re/$) of 3.6% QoQ (~125bps benefit), and absence of one off revenue reversal related to Lodestone (~40bps benefit).

- Expect PAT to decline 13% QoQ due to expected forex losses to the tune of Rs1.25bn during Q1FY14 as against a similar quantum of forex gain in the prior quarter.

- Key factors to watch: i) FY14 guidance and assumptions, ii) deal momentum, iii) pricing commentary and iv) Growth momentum in BFSI, discretionary spend segments and Europe.

Source : Equity Bulls

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