Oct 18, 2016 05:55 PM IST IST | Source: Moneycontrol.com
Buy Infosys; target of Rs 1175: ICICI Direct
ICICI Direct is bullish on Infosys has recommended buy rating on the stock with a target price of Rs 1175 in its research report dated October 14, 2016.
ICICI Direct's research report on Infosys
Infosys reported good Q2FY17 results as dollar revenue growth was above our estimates. US$ revenues grew 3.5% QoQ to $2,587 million, above our 2.4% growth and $2,561 million estimate. In constant currency (CC), revenue growth was also healthy at 3.9% QoQ and better than our estimate of 3.0% Rupee revenues grew 3.1% QoQ to Rs 17,310 crore, above our 2.2% QoQ growth and Rs 17,150 crore estimate EBIT margins at 24.9% grew 80 bps QoQ and were above our estimate of 24.7% largely on account of operational efficiency Reported PAT of Rs 3,606 crore was above our Rs 3,533 crore estimate Infosys declared an interim dividend of Rs 11/share.
Infosys is trading at an attractive valuation of 14.9x FY18 EPS. Also, its dividend yield of 2.5% limits the downside. We now anticipate Infosys revenues will grow at a CAGR of 10.6% with average EBIT margin of 24.9% over FY16-18E. Hence, we maintain our BUY recommendation on Infosys with revised price target of Rs 1175 (17x its FY18E EPS).
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