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Infosys Q2 results: 5 key things to watch out for

IT major Infosys is set to announce its second-quarter earnings on October 12, amid a sectoral downturn due to macroeconomic headwinds. The company, in the last quarter, remained cautiously optimistic in commentary but made a steep guidance cut. As the results of a new quarter unfold, here are the five key metrics to watch out for. 

Revenue growth 

Infosys revenue growth is likely to be in the range of 0.6-1.5 per cent on a quarter-on-quarter (QoQ) basis, according to a poll of brokerages. The growth is noted to be impacted by continued slowdown and rationalisation in discretionary spending. 

Margin and guidance

Brokerages expect EBIT margins to decline about 20-22 bps. Margin headwinds for the quarter are wage hikes, travel and other costs. Cost optimisation, better utilisation, and reduced sub-contractor costs could be some offsets. BNP Paribas expects Infosys to narrow its FY24 CC revenue growth guidance to 2-3.5 per cent from 1-3.5 per cent previously. 

Attrition, hiring and wage revision 

In Q1, Infosys’ total headcount fell by 6,940 employees from 3,43,234 in Q4 to 3,36,294. Voluntary attrition during the quarter fell to 17.3 per cent. The management had noted that the hiring outlook will depend on changes in the demand environment and attrition rates. Given the apprehensions around the delay in wage hike cycles, commentary on wage revision is also to be looked out for. 

Deals and conversion of pipeline

Infosys, in the recent past, has signed multiple multi-year deals, some for the artificial intelligence (AI) domain. Albeit the company last quarter had noted that it is seeing delays in decision making and revenue conversion of the pipeline would be realised only in the second half of the year. Hence, commentary on the ramp-up timelines of mega deals have to be noted. 

Management commentary

Investors will be keen to watch the management’s commentary on the performance of impacted verticals such as BFSI, retail, hi-tech and telecom. Update on large deal wins and pipeline, investments in GenAI partnerships and solutions, and approach towards margin levers. 

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