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Infosys Ltd Research Report - 25th Apr 2016

IT | Published on Apr 25th 2016

IT

For 4QFY2016, Infosys posted revenues of US$2,454mn (V/s US$2,446mn expected), up 1.6% qoq. In constant currency (CC) terms, the growth is of ~1.9%. Volume growth during the period is of 2.4% qoq. On the operating front, the EBIT margin came in at 25.5% vs our expectation of 25.2% and vs 24.9% in 3QFY2016, ie an expansion of 60bp qoq. The utilization levels (including trainees) improved to 74.7% V/s 74.2% in 3QFY2016, while the attrition rate was of 17.3% V/s 18.1% in 3QFY2016. The company posted a net profit of Rs3,597cr (V/s Rs3,634cr expected), up 3.8% qoq. For FY2017, the company has given a revenue guidance at 11.5%-13.5% in CC terms and 11.8%-13.8% in US$ terms at March 31, 2016 exchange rates. We maintain our Accumulate rating on the stock with a target price of Rs1,378. Quarterly highlights: For 4QFY2016, Infosys posted revenues of US$2,454mn (V/s US$2,446mn expected), up 1.6% qoq. In constant currency (CC) terms, the growth is of ~1.9%. Volume growth during the period is of 2.4% qoq. In terms of geography, North America grew 0.5% sequentially and by 0.6% in CC terms, while Europe grew 2.4% sequentially and by 3.6% in CC terms. In terms of industries, FSI grew by 0.2%, MFG & Hi-Tech grew by 0.8%, RCL grew by 2.7% and ECS grew by 4.9%, all in CC terms. On the operating front, the EBIT margin came in at 25.5% vs our expectation of 25.2% and vs 24.9% in 3QFY2016, an expansion of 60bp qoq. The company posted a net profit of Rs3,597cr (V/s Rs3,634cr expected), up 3.8% qoq. Outlook and valuation: For FY2017, the company has given a revenue guidance at 11.5%-13.5% in CC and 11.8%-13.8% in US$ terms at March 31, 2016 exchange rates. It gave a guidance of achieving sales of US$20bn by FY2020. We maintain our Accumulate rating on the stock.

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Accumulate

CMP 1,214
Target Price 1,378
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)222,103.06
MCAP NSE (Rs in Cr)221,999.70
P/E (x)15.75
EPS (Rs.)61.40
BV (Rs.)277.68
Div Yield (%)2.51
FV (Rs.)5.00
P/BV (x)3.43
EV/Sales (x)3.03
EV/EBITDA (x)11.06

Shareholding Pattern (%)

Foreign58.0
Institution18.0
Promoter13.0
Public & Others10.0
Corporate1.0
Grand Total100.0

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