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).For all recommendations, click here
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