Infosys Q1 results tomorrow: 4 things from revenue growth to deal wins to be watched out for in the earnings show

Q1 Results Preview: Infosys will be reporting its financial performance for the April-June 2024 quarter on Thursday 18 July 2024.

Moderate IT sector Q1 expectations

The expectations around financial performance by Infosys and other IT sector companies has remained subdued. General expectation is that the growth of the Information Technology services sector would be moderate in Q1FY25, mainly because of lower discretionary spending, which is being driven by uncertainty in the macroeconomic environment. The upcoming US elections also is impacting near term outlook.

The impact of the same was also visible on financial performance of IT majors as Tata Consultancy Services and HCL Technologies, that already have recently reported their earnings. Nevertheless some surprises on better execution leading to better than expected performance, deal wins and positive management commentaries have lifted the street confidence slightly

Will Infosys Q1 results also beat estimates and boost sentiments remains to be watched.

Infosys Q1 expectations and estimates

1. Revenue -Analysts at Axis Securities expect Infosys to report strong revenue growth of 2.4% sequentially, highest among the Large cap peers.

2. Margins -Additionally Axis analysts also expect operational margins to improve thanks to the reduction in onsite costs. Analysts at Motilal Oswal Financial Services too say that margin could improve for Infosys (by 30bps) as gains from its cost-benefit programs are offset by visa and other seasonal costs (with no wage hikes).

3. Guidance- Further the management is also anticipated by Axis and MOFSL to stick to the company's FY25 revenue growth estimate of 1% to 3%.

Analysts at Kotak Institutional Equities who had been expecting a better sequential growth rate for many companies due to seasonal strength, ramp-up of cost takeout deals won in earlier quarters and further due to the reducing intensity of cuts in discretionary programs, especially in the financial services vertical, have been expecting Infosys to lead the growth among Tier-1 companies, with 2.5% sequential growth.

Also while Kotak analysts too expect Infosys retaining its FY2025 revenue growth guidance at 1-3%, 

4.Deal wins- Analysts a Kotak Institutional Equities  ar expecting a reasonably large deal wins Total Contract Value (TCV) of more than $3 billion for Infosys.

Key Monitorable

Deal Total Contract Value and pipeline, pricing situation, attrition, and growth/margins/DSO forecast would be the main metrics to watch out for say analysts.

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