Infosys, the country's second largest software exporter, is likely to kick off the October-December earnings season with a disappointing set of numbers.
According to a CNBC-TV18 poll, the company is expected to report a net profit of Rs 2,255 crore for the quarter, compared with Rs 2,369 crore in July-September, a 4.8 percent decline.
The gloomy global economic scenario is also likely to have impacted the revenue growth.
The CNBC-TV18 poll projects a 2.4 percent rise in rupee revenue to Rs 10,090 crore and 4 percent in dollar revenue to $1.87 billion, including a likely$40-45 million contribution from Lodestone, the Zurich-based management consultancy firm it had acquired in September 2012.
Discounting Lodestone's share, the revenue growth will be just 1.5-2.0 percent, the poll showed.
There are indications that due to its focus on volumes, Infosys may have compromised on pricing this quarter.
According to a JP Morgan note last month, a senior company official told the brokerage that focus has shifted to volume growth, as it wanted to change clients' perception that it was relatively rigid in negotiations.
According to the poll, a 25-50 basis points sequential decline in pricing is likely. Analysts see volume growth between 2-2.5 percent.
A 6 percent wage hike for off-shore employees will also put a drag on the company's margins. Adding to the worries is a nearly 2 percent rise in the rupee against the dollar.
According to a BNP Paribas note after meeting the managements of various IT companies, there is an improvement in the pipelines, but with several riders.
"Among the publicly listed companies, Cognizant, HCL Tech and Satyam sounded the most positive; TCS, Wipro, MindTree and Hexaware were mildly positive, while Infosys was the most cautious," the note said.
What to watch out for
Guidance: There has been speculation that the company will cut dollar revenue guidance again from the current 5 percent growth.
According to a note from Axis Capital, "Near term seems challenging (for Infosys) due to tough macro and protracted recovery in BFSI vertical. Hence a downward revision in FY13 revenue growth guidance of 5 percent (dollar terms) is likely."
Analysts say the company would need to report at least 3.7 percent quarter-on-quarter growth in Dec as well as March quarters to meet the organic guidance. But that is looking uncertain.
Other key points to look for is the management's comments on calendar 2013 IT budgets; any pickup in deals and decision-making by clients across verticals; outlook on pricing and operating margins and employee hiring targets for FY2014.
Ahead of the earnings, Infosys shares closed down 0.3 percent at Rs 2,320 on the NSE today. The benchmark indices ended flat.