Q3 earnings: Expect Infosys to lower guidance, EPS estimates

By Sunita Nagpal

MUMBAI: It is almost given that Infosys will be lowering its guidance when it announces results on next Friday, i.e. January 11. The company is expected to lower its organic growth guidance to 3.5% from current 5% and that will be largely on account of delays in deal closures as well as the IT spend cuts by some of its BFSI clients.

However, it will maintain the overall guidance at 5%, with 1.5% coming from Lodestone. The third quarter will incorporate numbers from Lodestone, which contributed for two months of performance. Lodestone is expected to contribute $36 million of revenue.

EPS guidance will also be lowered from Rs 161 currently to roughly about Rs 160.

The markets will have a keen eye on the guidance. Anything lower than 3% for organic growth will be seen very negatively and the stock can continue to be under pressure in the coming weeks if the management commentary is negative.

As far as Q3 numbers are concerned, a 1.8% growth in dollar revenues is expected largely due to the fact that number of days are lesser in this quarter.

There will be pressure on the margin front as well. Lesser number of working days, lower utilisation in this quarter as well as the salary hike for offshore employees will lead to pressure on margins. lead 2