How brokers are reading Infosys Q2 earnings, FY14 guidance

Moneycontrol Bureau

IT services major Infosys Friday reported second quarter numbers were broadly in line or even a tad higher than what market was expecting. The stock is up 7.5 percent at a 33-month high of Rs 3360 on the BSE.

A glance at what brokerage firms have to say on the performance:

JP Morgan:

We do not believe that investors must read anything amiss into growth implications for the coming two quarters due to the unchanged USD revenue guidance (at the upper-end). It’s all about the significant revenue beat, which will please investors, in our view.

Margin performance in line with our expectation but given revenue growth, it could have been better. 

IDFC:

We expect the stock to trade up and settle in Rs 3200-3500 till next set of good news come in. We expect the stock to move sideways after today’s initial upmove. Maintain Outperformer rating.
 
Kotak: 

Results demonstrate that the company is on the mend. An improved demand environment has also helped overall numbers. Performance is the best way to assuage concerns on reorganisation and senior management exits. That the company has done it for the second consecutive quarter is creditable.   

Barclays:

Going forward, we believe Infosys will run on the twin engines of revenue strength and improving margins. Revenue trends are well supported by management commentary of a strong pipeline and good contract wins. We maintain our OW rating and price target of Rs 3,310.

Motilal Oswal:

We were expecting the company to raise its guidance of 6-10 percent YoY growth in USD revenues to 9-11 percent for FY14. Upper end of the band of guidance implies 0.8 percent CQGR (compounded quarterly growth rate) decline in revenues in the next two quarters versus 1.45 percent CQGR embedded in 9 month guidance post Q1 results.