Motilal Oswal has come out with its third quarter (September-December) earnings estimates for the information & technology sector. The brokerage house expects Infosys to report a 5.1 percent growth quarter-on-quarter (up 16.5 percent Y-o-Y) in net profit at Rs 2,760.9 crore.
Sales of Infosys are expected to increase by 0.5 percent Q-o-Q (up 25 percent Y-o-Y) to Rs 13029.1 crore, according to Motilal Oswal.
Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to rise by 4 percent Q-o-Q (up 18.7 percent Y-o-Y) to Rs 3,524.5 crore.
Motilal Oswal's Report on Infosys:
Infosys' guidance of 9-10 percent growth in full-year USD revenues implies -1.6 percent revenue CQGR to meet the lower end and -0.8 percent CQGR to meet the higher end. We expect the company to beat the higher end of the guided band.
For 3QFY14, we expect overall revenue to grow 1.7 percent Q-o-Q to USD 2.1 billion. This includes positive impact of 50bp from cross-currency, implying constant currency (CC) revenue growth of 1.2 percent Q-o-Q. In INR terms, we expect revenue growth of 0.5 percent Q-o-Q to INR 130.3 billion.
We expect EBITDA margin to expand 100bp Q-o-Q to 27.1 percent.
Infosys has been aggressive in addressing cost optimization and we expect some gains from the lower hanging fruits to show on the margins, as well. We expect overall utilisation including trainees to decline 70bp Q-o-Q to 73 percent due to the shutdown and furloughsexperienced during the quarter.
We expect PAT to increase 5.1 percent Q-o-Q to INR 27.6 billion, led by higher margins.
The stock trades at 19.3x FY14E and 16.3x FY15E earnings.
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