Axis Direct's research report on Infosys
Challenging macro and weak BFSI has led to Infosys’ FY17 revenue guidance cut being higher at 250-300 bps (in cc terms) to 8-9%. Revenue target seems achievable given large deals wins in FY16/H1FY17, strong client mining and consistent progress under its new/differentiated offerings of MANA, Panaya, Skava, Design Thinking (DT) etc. However, lack of triggers in FY17 (muted growth in Q3, Q4) would keep the stock range-bound.
Given weak macro and muted demand environment, we expect FY17E/FY18E USD revenue growth of ~8.5%/ 10% (earlier: 9%/ 11%). However, better execution and higher other income leads to no material change in our FY17E/ FY18E EPS at Rs 63/ Rs 72. We believe its differentiated growth strategy on “Renew and New” and accelerated focus on client mining / large deals will play out in the long term. Our TP stands at Rs 1,075 (15x FY18E EPS), implying 5% upside from CMP of Rs 1,027. The stock trades at 16x FY17E / 14x FY18E earnings.For all recommendations, click here
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