IT behemoth Infosys, which is set to announce its Q3FY25 results on January 16, might alter its guidance yet again, say analysts. In Q2, Infosys revised its revenue growth guidance for the seventh time in eight quarters to 3.75-4.5 per cent in constant currency (cc) terms. Some other key performance indicators are listed below:

Revenue growth

According to a poll of brokerages, revenue in the quarter ended in December is predicted to be around ₹41,756—₹41,876 crore, a sequential improvement from last quarter’s ₹40,986 crore. The quarter-on-quarter (q-o-q) revenue growth forecast for Q3 is set at 0.3 to 1 per cent in cc terms.

“As discretionary demand came under pressure, so did revenue growth, resulting in multiple rounds of guidance cuts. We prefer to play the demand recovery cycle with Infosys, where expectations are modest, valuations are reasonable, and GenAI and discretionary demand could be catalysts. The company’s cost structure also appears to have come under control as its two-year margin expansion initiative, Project Maximus, is showing results,” a BNP Paribas report noted.

Margin & Guidance

Infosys is likely to record earnings before interest and tax (EBIT) margin of 21.3 to 21.5 per cent in Q3, a flat growth from last quarter’s 21.1 per cent. A Motilal Oswal Financial Services (MOFSL) report observes that margins may decline by 30 bps due to furloughs and lower working days, offset by pricing gains, subcontractor cost optimisation, and Project Maximus (a margin improvement plan). However, an Emkay Global Financial Services report expects the EBIT margin to expand by 20bps sequentially, on the back of operating efficiencies and rupee depreciation.

Brokerages also predict Infosys will alter the lower end of its growth guidance of 3.75-4.5 per cent in cc terms to 4-4.5 per, making it the eighth revision in nine quarters.

Deals & TCV

During the quarter, Infosys closed three deals with Kardex, StarHub and RheinEnergie.

Commenting on the overall IT industry in India, the Emkay report explained: “In Q3FY25, deal wins should remain similar to the previous quarter. However, the absence of mega deals and continued weak discretionary spending should continue to weigh on overall deal intake in Q3 as well. The overall construct of deal wins should remain similar, with cost takeout and vendor consolidation deals remaining the mainstay. The deal pipeline remains healthy across most companies, while the pace of decision-making varies across sectors and clients.”

In the quarter ended September, Infosys’ large deal total contract value (TCV) stood at $2.4 billion, a significant decrease from Q1’s $4.1 billion.

Attrition and Hiring

Infosys’ total headcount in Q3 was recorded to be 3,17,788, an increase of 2,456 from the previous quarter’s 3,15,332. Voluntary attrition in Q2 rose to 12.9 per cent from Q1’s 12.7 per cent, but fell from Q2FY24’s 14.60 per cent.

During Infosys’ Q2 earnings conference call, CFO Jayesh Sanghrajka indicated wage hikes in Q3, saying part of the employees will get it effective first of January and the balance, effective first of April. However, recent reports have indicated that wage hikes will be further deferred to Q4.