INFOSYS RESULTS AHEAD: WHAT TO DO BUY OR SELL ?

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On Tuesday, shares of Infosys fell in line with the competition ahead of the tech majors' quarterly earnings for the January-March quarter, due Wednesday. With the exception of TCS & HCL Tech, all tech stocks in the Nifty package traded in negative territory. Infosys shares are down more than 2 % on the day, trading at Rs.1,739.45 on the NSE at the time of writing, down 1.5 % from the previous close for the quarter ended tomorrow, March 31. March 2022, and a CNBC-TV18 survey of market analysts indicated a marginal increase in the company's revenue and earnings on a sequential basis. We follow the IT sector and expect Infosys revenue to increase by 3.1% to Rs.32,867 crore versus Rs.31,867 crore in the previous quarter. Corporate profit after tax is expected to rise 2.94 % to Rs.5980 crore from Rs.5809 crore in the December quarter.
The Street expects earnings before interest and tax to come in at Rs.7,653 crore versus Rs.7,484 crore in the last quarter. According to the survey, the EBIT %age is likely to be 23.3 %, compared to 23.5 % previously. In dollar terms, we expect Infosys revenue to increase 2.7 % to $4,365 million from $4,250 million in the October-December quarter. While Infosys shares have been one of investor favorites, the stock posted earnings posting ahead of the gains. Technology company stocks have wiped out 6 % of investor wealth in the past five days and 8 % in a month. However, over the one-year period, the stock has returned more than 21 %, compared to the benchmark Nifty, which is up 22%.

We believe there will be an upside surprise from some IT companies in the coming quarters. The likelihood of this is relatively higher in the mid-range, but we are relatively more bullish on Infosys within Tier-I and within mid-tier Mphasis and Persistent Systems. Speaking of Infosys, a growth premium is visible for it and he would also pay attention to margin guidance. You have to see the growth premium; the growth premium of 100-200 basis points per second of Tier II or Mid-Tier IT over Tier I has increased to almost 10%. I think on a more sustainable basis 500-600 bps is something they can deliver. We expect Infosys to report 12-14% revenue growth guidance for FY23, similar to FY22. While Kotak and CLSA expect revenue guidance of 11-13%, consensus estimates actual revenue growth is 15-16%.