India's $100 billion-a-year information technology and back-office outsourcing industry earns about three-quarters of its revenues from customers in the United States and Europe.
Shares in the company gained 0.5 per cent in a weak Mumbai market yesterday, but over the last quarter they are down over 12 per cent against 2 per cent gains on the BSE Sensex over the same period.
The company missed its dollar revenue forecast in the last quarter, and is likely to lower the same for the 2012-13 fiscal year.
Earnings preview: Consolidated sales are likely to rise 9.75 per cent sequentially at Rs 9,715.2 crore for the quarter ending June against Rs 8,852 crore in the March quarter. Profits are seen rising 7.2 per cent at Rs 2,482.7 crore against Rs 2,316 crore quarter-on-quarter. Ebitda margins, a key measure of profitability, are expected to expand by 80-100 basis points, while margins are seen between 33.4-33.6 per cent against 32.6 per cent (QoQ).
Dollar revenue: For the June quarter, analysts expect little or no sequential dollar-term sales growth for Infosys. Revenue is expected to be flat at $1774.5 million against $1771 million (QoQ).
Forex impact: Analysts see some negative cross-currency effect due to the move in the euro and British pound versus the US dollar. Cross currency might hit earnings by 100 basis points. Forex loss is pegged at Rs 110 crore against gains of Rs 60 crore (QoQ). Infosys hedge book stood at $889 million at the end of the March quarter.
Hiring: The company postponed the joining dates of campus hires by a quarter. It has guided for 35,000 gross additions in FY'13.
Guidance to be in focus: Analysts expect Infosys to pare its revenue growth estimate for the current fiscal year to as low as 5 per cent. The company in April had forecast 8-10 per cent growth for the fiscal year ending March 2013, which was lower than industry lobby NASSCOM's export expectations of 11-14 per cent.
The company may lower the dollar revenue guidance to 6-8 per cent for the full fiscal. The earnings per share (EPS), in rupee terms, may be hiked to Rs 173-177 which translates into a growth of 19-22 per cent against previous forecast of Rs 158.7-161.4 (growth of 9.1-10.9 per cent).
For the second quarter (July-September), Infosys is likely to guide for 3-4 per cent US dollar revenue growth, while the rupee EPS is likely to be Rs 45, implying a 6 per cent growth.
"The key thing to look for is how much they guide for the second quarter and what is the ask rate for Q3 and Q4. Anything higher than 3.5 per cent for the second quarter would be positive," Hitesh Shah, analyst at IDFC Securities said.
Analysts would also be closely tracking the deal wins in the June quarter and any commentary on what the company plans to do with the $4.1 billion cash reserves it has on its balance sheet (as of March 31, 2012).