How do analysts view Infosys Q2 results?
Software services exporter Infosys reported second quarter results, largely-in-line with street expectations, but disappointed the street with a deeper cut in earnings per share guidance.
October 12, 2012 / 17:25 IST
Moneycontrol Bureau
Software services exporter Infosys reported second quarter results, largely-in-line with street expectations, but disappointed the street with a deeper cut in earnings per share guidance.The Bangalore-based company reported a net profit of Rs 2,369 crore in July-September quarter, up 24% year-on-year (3.5% quarter-on-quarter), while quarterly revenue rose 21% from a year ago (2.5% sequentially).Infosys cut its EPS guidance for the full year, which is now expected to be at at least USD 2.97, down from USD 3.03 it had forecast earlier and has also lowered its full-year rupee EPS guidance to Rs 160.61 from 166.46.Here's how analysts viewed Infosys results and the guidance:Angel Broking: The company has finally announced wage hikes for its employees, which will negatively impact the operating margins (which are already under pressure since past 2 quarters) in the next quarter. Overall the results were subdued with guidance numbers indicating that the environment remains challenging for Infosys. We may further downwardly revise our estimates for FY2013. Rating: Accumulate.Asit C Mehta: Infosys is now walking an extremely tight rope in which it will have to clock growth rates in excess of 3.5% in both the subsequent quarters which are supposed to be seasonally weak in nature. This makes us believe that Infosys will find it extremely difficult to achieve 5% revenue growth for FY13. That in turn could be detrimental for earning estimates and valuations. Rating: Sell. Barclays: The results continue to highlight the challenges that the company is facing on both revenue growth and profitability, the two parameters where it has historically been the industry leader. Infosys now needs to deliver a sequential revenue growth of 3.7% for the remaining two quarters of the year to meet its full-year guidance. Given the last four quarters' revenue growth of 3.4%, -1.9%, -1.1% and 2.6%, this does not seem to be an easy task. Jefferies: The company has maintained its guidance of 5% year-on-year organic revenue growth (USD terms) for FY13 – implies CQGR of 3.7% over Q3, Q4. Considering the volatile environment and the fact that second half is seasonally weaker, meeting this will be good enough for the stock to perform, in our view. Rating: Buy. Target: Rs 3,075.Kotak Securities (Private Clients Group): Markets were factoring in Infosys to match expectations for the quarter. There has been a miss but the extent of miss is marginal. On the other hand, the supporting matrix in terms of growth of top 10 clients and winning of large deals have been decent. The portfolio change in senior management change is expected to have minimal impact on the growth prospects of the company.Microsec: A part of the cut in FY13 rupee EPS guidance was expected, led by appreciation of rupee versus the greenback. However, the unanticipated part was downward revision of US dollar EPS guidance from USD 3.03 to USD 2.97. The company’s performance during the quarter remained disappointing on operating front whereas other income helped it limit the damage of it, on bottom line.Infosys shares plunged over 8% on opening on Friday morning as investors gave a big thumbs down. The stock eventually ended trading at Rs 2,395.35, down 5.4% on NSE. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
