Infosys Ltd shares jumped nearly 5 per cent in early trade on Monday as investors await the IT company’s earnings announcement for the fourth quarter (Q4) ended March 2020.
At 10:56 am, Infosys shares were trading at Rs 659.50, up 4.85 per cent compared with their previous close. After a steep correction in February and March after the Coronavirus pandemic triggered equity selloff, the stock has now recovered nearly 12.5 per cent in the last one month.
Analysts are expecting India’s second-largest IT company Infosys to report a sequential decline in Q4 profit as the previous December 2019 quarter had non-recurring benefit of Rs 242 crore on income tax refund.
Also, Q4 revenue growth in rupee terms could get a boost from the depreciation in the rupee against the US dollar, but dollar revenue growth is expected to be muted.
In an earnings preview, brokerage firm ICICI Direct said, “We expect revenues to grow 0.2 per cent QoQ in constant currency terms (presuming 1 per cent hit due to Covid-19). With cross-currency acting as a headwind of 30 bps, USD (dollar) revenue may witness a marginal dip of 0.1 per cent QoQ while dollar appreciation would lead to rupee revenue growth of 1.7 percent QoQ.”
Kotak Institutional Equities said Infosys earnings could take a hit from missed billings and lockdowns in India and developed markets in the last two weeks of March 2020. “Without the Covid-19 hit, its revenue growth assumption would have been 1.5 per cent QoQ in constant currency.”
Investors would also keep an eye on the guidance given by Infosys for the full fiscal. However, most of the brokerages feel the company will restrain from giving any forecast for FY21 due to uncertainty over how the lockdown condition will dilute in India and other parts of the world.
Brokerage firm Sharekhan said though it believes Infosys might not provide revenue growth guidance, “if it provides annual revenue and margin guidance for FY21, the guidance range would be higher than its normal range of 2 percentage points”.