IT bellwether Infosys is scheduled to announce its fourth-quarter benefits later today. The firm will also look at a final dividend for FY21 along with a proposed share buyback. Most brokerage firms and analysts count on IT organizations to post robust income development. Infosys share price tag surged 8.5 per cent in Jan-Mar 2021, and 11 per cent so far this year (YTD). During the quarter ended March 31, 2021, the Nifty IT index jumped 6.61 per cent, as against a rise of 5 per cent in the Nifty 50 index. Earlier this week, Tata Consultancy Services (TCS) reported a 15 per cent on-year rise in net profit and declared a dividend of Rs 15 per share.
Key factors to watch out for
Revenue, EBIT margin: Analysts at brokerage firm Nirmal Bang count on Infosys to report a double-digit income development, when they think that margins might take a bit of a hit in FY22 due to the roll-out of wage hikes and investment phase in some of the massive projects. “The same shall be partly offset by strategic measures and cost optimization programs implemented by the company,” they added. They also see that substantially of the incremental income in 4QFY21 to come from the massive offers won lately.
Share buyback: Infosys will look at a share buyback, which would be the third buyback by the IT firm in the final 5 years. IT giant completed its very first buyback of Rs 13,000 crore in December 2017, comprising 11.3 crore equity shares at a price tag of Rs 1,150 per share. In August 2019, it had purchased back 11.05 crore shares below its Rs 8,260 crore buyback give, at an typical price tag of Rs 747.38 per equity share. According to analysts the maximum permissible size of the buyback is 25 per cent of net worth.
Dividend: Infosys in a BSE filing mentioned that the board of directors have advised a final dividend for the monetary year ending March 31, 2021. Earlier this TCS also announced a dividend of Rs 15 per share. In the earlier 3 quarters, TCS has offered interim dividends of Rs 5 per share, Rs 12 per share, and Rs 6 per share. The total dividend offered by TCS in FY21 stands at Rs 38 per share.
FY22 guidance: Analysts count on that March quarter will be a different quarter of development for IT service organizations backed by massive deal ramp-ups and continued invest on digital platforms. “We expect Infosys to guide for 12-14 per cent revenue growth for FY2022E,” analysts at Kotak Institutional Equities mentioned. The brokerage firm also added that all the organizations will finish up with 20-570 bps larger EBIT margin on on-year comparison.
Attrition price, pent-up hiring: Kotak Institutional Equities expects attrition prices to move back to pre-Covid levels more than the next 9-12 months. It added that pent-up hiring and constraints in digital talent provide will lead to important wage inflation for talent in niche digital expertise. “Wage revisions and attrition will be the key factors to watch for; large companies will be able to weather this storm better,” it mentioned. Last year in October, Infosys announced to roll out salary hikes and promotions across all levels powerful January 1 as the firm predicted larger development in the year ahead on the back of massive deal wins from shoppers.
Infosys reported a 16.8 per cent on-year rise in consolidated net profit for October-December 2020 quarter at Rs 5,215 crore. The firm had reported a profit of Rs 4,466 crore in the similar quarter of earlier year. Infosys’ gross income for the quarter below critique rose 12.3 per cent on-year to Rs 25,927 crore. It was up 5.5 per cent on a sequential basis.