Infosys Q2 Results: Five things to watch out for

The Bengaluru-based IT major Infosys would be announcing the second quarter results later today. The brokerages and analysts expect Infosys to clock almost a double growth in its revenues.

DH brings to you five key things to watch out for:

Guidance level: The company is expected to increase its revenue growth guidance for FY20 on the back of strong large deal momentum and market share gains, given the visibility in revenue growth. The company’s current revenue guidance stands at 8.5%-10%, which most brokerages are expecting to be increased by at least 50 bps. The company has signed new deals worth $2.7 billion in the first quarter.

Sectoral performance: The US market accounts for 60% of the company’s total revenue. Clients in the banking and financial services industry (BFSI) bring 32% of the business. In the June quarter, growth remained largely flat in both these segments. So, investors will keep a watch on management commentary on the BFSI vertical and the North American business, especially any commentary on the US-China trade war.

Attrition: Though the company of has been in a hiring mode, yet the data shows that company has been seeing increased number of departures. The attrition level in the company, during the June quarter, stood at an alarming 23.4% - mostly seen at the lower levels.

Shareholder bonanza: From financial year 2020, the company expects to return approximately 85% of the free cash flow cumulatively over a five-year period through a combination of semi-annual dividends or share buyback or special dividends. The company’s competitor, TCS announced a dividend of Rs 45 per share, including special dividend of Rs 40 per share. The record date of dividend is October 18 and payment date is October 24. The investors would be watching out for perks doled out.

Digital revenues: The company’s digital revenue accounted for 35.7% of total topline during the June quarter, a marginal improvement against 33.8% in the March quarter. Its digital revenue in April-June grew 8.1% sequentially to $1,119 million from $1,035 million in the previous quarter ended March. On a year-on-year basis, it grew 39.3% from $803 million in the quarter ended June 30, 2018. Analysts would be keenly watching out for the digital business numbers – given CEO Salil Parikh’s focus on it.