All eyes are on Infosys as the company announces its first earnings after Nandan Nilekani's return
All eyes are on Infosys earnings this time round. For one the reason is that this is the first earnings after the return on Nandan Nilekani to the helm.
Analysts expect the outcome of the board meeting to reflect on long-term stability in the business along with short-term confidence building measures like date for share buyback and employees' salary hike.
An average of analysts' poll by CNBC-TV18 has seen profit flat at Rs 3,496 crore against Rs 3,483 crore in the previous quarter. Revenue is seen increasing 3.2 percent sequentially to Rs 17,630 crore and dollar revenue 3.3 percent to $2,738 million.
Constant currency revenue growth is expected to be at 2.2 percent for the quarter against 2.7 percent in Q1. Earnings before interest and tax (EBIT) is seen falling to Rs 4,097 crore during the quarter, compared with Rs 4,111 crore in the previous quarter. Operating margin, meanwhile, is seen declining 50 basis points to 23.6 percent sequentially due to wage hikes.
However, analysts will also closely watching the management commentary. "The Infosys board has two key issues to manage currently -- one, ensuring stability by way of managing stakeholder sentiment and two, offering visibility by way of sharing concrete guidance," Greyhound Knowledge Group CEO and Chief Analyst Sanchit Vir Gogia told PTI.
He further said while multiple short-term tactics like share buyback, employees salary hikes and active client conversations can be expected to ensure stability, it is the concrete guidance that needs most focus and work.
Infosys has been in the news since the beginning of 2017 due to sharp differences between its founder NR Narayana Murthy and the company's board under R Seshasayee as Chairman and Vishal Sikka as CEO over governance issues.
Murthy had also expressed concern over Rs 1,250 crore acquisition of Israel based IT firm Panaya based on anonymous letter, which alleged wrong doing in the deal. An audit done by international law firm Gibson Dunn and Control Risks found no evidence of wrongdoing in the Panaya acquisition.
Sikka resigned from the company on 18 August after a series of allegations levelled by Murthy. Seshasayee and Infosys co-chairman Ravi Venkatesan resigned in the following week.
Nilekani returned to the board of the company after a gap of about seven years as non-executive chairman on 24 August. His appointment seems to have settled the dust of controversies around board, however, stakeholders are now looking for uptake of the company's business under Nilekani's regime.
Infosys Chief Operation Officer UB Pravin Rao was given interim charge of managing director and CEO on 24 August. The announcement of regular CEO is due from the company.
The company had posted 1.3 percent increase in net profit to Rs 3,483 crore for the June quarter, helped by client wins in key markets, and raised its annual US dollar revenue outlook.
Its revenue grew 1.7 percent to Rs 17,078 crore in the first quarter of 2017-18 as against Rs 16,782 crore in the year-ago period.
(With inputs from PTI)