Don't see an increase in Infosys' FY10 outlook: JP Morgan

116517 Investors following Infosys. Share this News with them.

0

Like this story, share it with millions of investors on M3

Don't see an increase in Infosys' FY10 outlook: JP Morgan

Bhavin Shah of JP Morgan does not expect a meaningful diversion from guided EPS. "We see FY10 and FY11 EPS at Rs 106.5 and Rs 126.8 respectively." Shah does not expect Infy to increase its full-year guidance. "We may see some guidance revision from Q3 FY10."

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other FIIs are saying about the markets See what other experts are saying about markets See what Udayan Mukherjee is saying about the markets Infosys BSE | NSE 25/05/12 Are Mutual Funds betting on Infosys? Other Stocks in this news Tata Consultancy Services |

Bhavin Shah of JP Morgan said the Software Technology Parks of India (STPI) extension in the budget will benefit companies by 3-4% in FY11. He sees limited upside in Infosys but finds TCS still undervalued.

On the Q1 results of IT companies, Shah said he does not expect big surprises from IT this quarter. "IT companies are likely to see low single-digit revenue decline. We expect margin erosion based on hedged positions and would look out for the Q2 FY10 outlook." He sees some resumption of growth in Q2 FY10.

Speaking on Infosys' Q1 numbers which are expected tomorrow, Shah expects some margin erosion on visa; and selling, general and administrative costs. "We see a better chance of upside in dollar revenues."

He does not expect a meaningful diversion from guided EPS. "We see FY10 and FY11 EPS at Rs 106.5 and Rs 126.8 respectively."

Shah does not expect Infy to increase its full-year guidance. "We may see some guidance revision from Q3 FY10."

Also Read:

Here is a verbatim transcript of the exclusive interview with Bhavin Shah on CNBC-TV18. Also see the accompanying video.

Q: Will the Software Technology Park of India (STPI) extension in the budget change your forecast at all for the next year?

A: I believe the government has essentially answered most requests from the technology sector. I think the extension of STPI should help different companies depending on which company you are looking at, maybe from a marginal impact to 3-4% benefit in FY11.

While Fringe Benefit Tax (FBT) is not a big number, it suddenly removes some of the procedural headaches, so some small benefit from there as well. Also, there is some simplification on the service tax related matter for export companies. I think there are multiple things that seem to have been addressed.

Q: Before we speak about Infosys specifically, tell me what are you expecting from the IT sector per se during this quarter?

A: We don't expect any big surprises from this quarter itself. I think we are going to see anywhere from one to low single to mid-single digit revenue decline depending on how well some companies are hedged and obviously some small rupee appreciation, So depending on that, you will see some margin erosion. Also, some companies have one-off cost in Q1 like visa and selling, general and administrative expenses (SG&A). So, that itself is not going to be a big surprise. I think what companies come out and say about the September quarter is going to be a lot more interesting. We do expect companies to talk about resumption of some sort of growth in the September quarter, not a huge growth but some sort of low single-digit growth.

Continued on next page ...