More Stories

Informist, Tuesday, Jul. 22, 2025

 

By Anjana Therese Antony

 

MUMBAI – Information technology major Infosys Ltd. is likely to post muted sequential growth in its top line for the June quarter, but its bottom line is likely to fall. However, broking firms are bullish about the company's business operations due to strong demand in the banking, financial services, and insurance segment, which accounts for more than 28% of Infosys' top line.

 

At least five broking firms expect the company to raise its revenue growth guidance in constant currency terms for 2025-26 (Apr-Mar) to 1-3% from 0-3?rlier. Nuvama Institutional Equities is more bullish and expects Infosys to raise its revenue growth guidance for the current financial year to 1-4%. Meanwhile, Infosys' margin guidance for FY26 is likely to be retained at 20-22% for the 10th consecutive time.

 

The Bengaluru-based company's consolidated net profit is expected to fall 3.5% from the preceding quarter but rise 6.5% on year to INR 67.85 billion, according to an average of estimates from 17 broking firms. JM Financial Services has the highest estimate of INR 71.25 billion for Infosys' bottom line and ICICI Securities has the lowest estimate of INR 64.93 billion.

 

Infosys' consolidated revenue for the June quarter is seen rising 2.2% on quarter and over 6% on year to INR 418.32 billion, as per the average of estimates. Nirmal Bang Institutional Equities has the highest top line estimate of INR 422.62 billion while HSBC Global Research has the lowest estimate of INR 414.81 billion. 

 

Along with growth in the core BFSI vertical, Infosys is also expected to post growth in the manufacturing vertical, its second-biggest segment. However, retail, its third-top vertical, along with communications, automobile, and hi-tech businesses are expected to see muted growth, ICICI Securities said. "New deal closures are delayed as clients still need clarity on how their supply chains and cost structure will be affected due to recent tariff announcements," the broking firm said.

 

After the earnings of some large-cap IT companies, broking firms had said the deterioration in demand is not as bad as what was expected at the beginning of the quarter. Expectations were grim at the start of the quarter as US President Donald Trump had threatened trading partners with tariffs in February. Nirmal Bang expects muted growth in the company's total contract value due to the delay in new deal closures owing to uncertainty about US tariffs. HDFC Securities expects the total contract value for the reporting quarter at $3 billion, slightly higher than the $2.6 billion reported in the previous quarter.

 

Infosys will announce its quarterly results Wednesday. The management's post-earnings press conference will be at 1615 IST in Bengaluru and the earnings conference call with analysts is scheduled at 1730 IST. Investors will closely watch for the company's comments on US tariffs, clients' IT budget for 2025, their spending patterns, risks of project cancellations, discretionary spending, deal pipeline, and the pace of deal closures.

 

SALES, MARGIN

While most large cap IT companies have reported a sequential decline in revenue in constant currency terms, Infosys is likely to report an on-quarter growth in revenue. "The company's strong reliance on discretionary spends (35-40% of revenue) makes it well-placed to benefit from demand revival," Anand Rathi said in its earnings preview report. 

 

Estimate for sequential revenue growth in constant currency ranges from Nirmal Bang's 0.6% to Prabhudas Lilladher's 2.2%. In the March quarter, the company's revenue had fallen 3.5% sequentially, but had grown nearly 5% on year. Revenue growth in the June quarter will be supported by steady ramp-up of deals won in the previous quarters, seasonally-better calendar days, continued strength in the financial services vertical, and contribution from recent acquisitions such as US-based MRE Consulting and Australia-based The Missing Link. Infosys acquired the US-based technology and business consulting service provider for $36 million and the Australian cybersecurity services specialist firm for around $62.5 million.

 

Expectation that Infosys will likely raise its revenue growth guidance for FY26 by 1-3%, is similar to announcements made by the company's peers such as HCL Technologies and Wipro in the June quarter. In the previous quarter, Infosys had said the lower end of 0-3% sales growth guidance for FY26 "baked in some further deterioration in the environment."

 

However, many broking firms believe that revenue growth is unlikely to translate into an operating margin expansion for the reporting quarter. Infosys had reported an operating margin of 21% in the previous quarter. At least five broking firms expect Infosys' earnings before interest and tax margin to be flat sequentially as the impact of wage hikes and higher costs for ramping up large deals are likely to offset the benefits of a higher revenue. The company had given wage hikes for senior-level employees in April.

 

ICICI Securities expects the company's EBIT margin to decline 25 basis points on quarter due to the impact of wage hikes, ramp-up costs due to large deals, the rise in selling, and general and administrative expenses on account of marketing events conducted in the US. However, this fall is expected to be offset by the absence of one-time expenses and cost efficiency measures under the margin expansion programme, Project Maximus. This was a margin expansion programme announced in 2023 to absorb the headwinds from the fall in utilisation of staff. IDBI Capital Market & Securities is the only outlier that expects Infosys' EBIT margin to grow 15 bps on quarter.

 

At 1222 IST, shares of Infosys were at INR 1,581.70 on the National Stock Exchange, down 0.2% from the previous close. The stock has risen almost 12% from Apr. 17, when the company had released its March quarter results. 

 

Of the 21 research reports available on the company with Informist, 17 brokerages have a 'buy' or equivalent rating on the stock with an average target price of INR 1,802, a premium of 14% to the current market price. The remaining four broking firms have a 'hold' rating with an average target price of INR 1,516, translating to a 4% discount. 

 

Following are the Apr-Jun earnings estimates for Infosys based on reports from 17 brokerage firms in descending order of the estimate of net profit:

 

Broking firm	Net Profit  (INR million)	Net Sales  (INR million)	EBIT margin in %
JM Financial Institutional Securities Pvt Ltd.	71,246	4,19,494	--
HDFC Securities Ltd.	69,550	4,18,370	21.1
Sharekhan Ltd.	69,400	4,19,370	--
Kotak Institutional Equities	68,571	4,18,281	21.1
IDBI Capital Market Services Ltd.	68,550	4,17,985	21.1
Prabhudas Lilladher Pvt. Ltd.	68,500	4,19,700	21.1
Elara Securities (India) Pvt. Ltd.	68,433	4,16,950	--
Nuvama Wealth Management Ltd.	68,181	4,19,904	21.1
Emkay Global Financial Services Ltd.	67,989	4,19,869	--
Antique Stock Broking Ltd.	67,888	4,20,145	--
Anand Rathi Share and Stock Brokers Ltd.	67,725	4,17,644	20.9
Nirmal Bang Equities Pvt. Ltd.	67,465	4,22,623	20.7
Indsec Securities and Finance Ltd.	67,400	4,16,800	20.8
HSBC Global Research	66,056	4,14,813	20.5
Motilal Oswal Financial Services Ltd.	66,000	4,17,000	--
Dolat Capital Market Pvt. Ltd.	65,491	4,17,101	--
ICICI Securities Ltd.	64,925	4,15,348	20.7
Average	67,845.29	418,317.47	--

 

End

 

US$1 = INR 86.27

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Nishant Maher

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.