Despite founder Narayana Murthy’s coming back to Infosys for a second innings as executive chairman, market expectations remain muted about the company’s performance when it announces its quarterly results on Friday.
Brokerage and research firms said they believe in the Infosys story in the medium-to-long term, though, in the short-term, there will be some hiccups for the company as Murthy makes necessary changes.
Expectations are rife that the company may lower its annual revenue guidance by a notch given the fact that fundamentals have not changed for the company and Murthy has himself said that he would take around three years to build a “desirable” Infosys.
“I am not very bullish about Infosys’s first-quarter results this fiscal,” said Sanil Kumar, national sales head at financial services firm Geojit BNP Paribas. “The company may paint subdued earnings forecast and could possibly lower the annual revenue forecast to 6-8% from an earlier projection of 6-10%.”
Ankita Somani, research analyst at brokerage firm Angel Broking said that though Infosys’ revenue could rise in rupee terms by around 6%, in dollar terms they are expected to rise only by 1-2%. “The depreciation of the rupee will have a positive impact on the revenues. But net profits are expected to remain flat,” said Somani.
Emkay Global Financial Services expects a marginal fall in the company’s operating profits “on account of full-quarter impact of onsite wage increments and continuous investments to boost volume growth”
However, in the medium-term, everybody expects Murthy to bring Infosys back on the high-growth path.
In fact, in an apparent sign of change after his return as executive chairman last month, the company’s global sales head, Basab Pradhan, resigned suddenly on Tuesday, just three days ahead of the company’s quarterly result announcement.
According to senior executives at Infosys, Murthy is insisting on closely assessing senior executives’ performances in the company and anybody found lagging could be shown the door.
Investors and other stakeholders want the company to quickly shake off its inertia and get on to the positive path.