Infosys’ numbers for 1QFY2017 have come in lower than our expectations. Its
revenues grew 2.2% on a sequential basis to US$2,501mn (V/s US$2,548mn
expected); the growth was mostly volume led. In INR terms, revenues came in at
`16,782cr (V/s `17,072cr expected), up 1.4% qoq. In constant currency (CC)
terms, sales grew 1.7% qoq. On the operating front, the EBDITA and EBIT
margins dipped by ~121bp qoq and ~140bp qoq to 26.5% and 24.1%
respectively. Consequently, the PAT de-grew by 4.5% qoq to `3,436cr (V/s
`3,514cr expected). The FY2017 revenue guidance has been revised to 10.5%-
12.0% in CC terms. We maintain our Buy rating on the stock with a target price
of `1,370.
Quarterly highlights: The company’s revenues for the quarter grew 2.2% on a
sequential basis to US$2,501mn (V/s US$2,548mn expected) with the growth
mostly being led by volumes. In INR terms, revenues came in at `16,782cr (V/s
`17,072cr expected), up 1.4% qoq. In CC terms, sales grew 1.7% qoq. In terms
of geographies, USA, Europe, and RoW posted a CC qoq growth of 2.4%,
(0.3)%, and 4.9% respectively, while India dipped by 8.2% qoq on a CC basis
during the quarter. In terms of verticals, FSI posted a CC qoq growth of 1.7%,
and Manufacturing & Hi-Tech posted a CC qoq growth of 2.4%. On the
operating front, the EBDITA and EBIT margins dipped by ~121bp qoq and
~140bp qoq to 26.5% and 24.1% respectively. Consequently, the PAT de-grew
by 4.5% qoq to `3,436cr (V/s `3,514cr expected).
Outlook and valuation: Following a soft start to the year, Infosys cut its FY2017
revenue growth guidance to 10.5-12.0% in CC terms from 11.5-13.5% earlier.
This implies an ask rate of 3.1%-4.1% for the remainder of the year. It gave a
guidance of achieving sales of US$20bn by FY2020. We maintain our Buy rating
on the stock.
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...
Please Wait...