Infy revenues to grow at 11-11.5%; TCS top bet: Angel

Post the Infosys second quarter numbers, Angel Broking has revised the company's FY14 revenue growth to 11-11.5 percent from 9-9.5 percent earlier. Speaking to CNBC-TV18, Ankita Somani of Angel Broking said FY15 EPS can go up to Rs 216, which is a 3-4 percent jump from the earlier estimate of Rs 206-207.

Also Read: See Infosys-TCS valuation gap narrowing: IDFC

Despite Infy's the good set of numbers, TCS continues to remain Angel's top IT bet follwed by HCL Tech. Infosys is their third best pick and Somani suggests accumulating the stock with a target price of around Rs 3,500.

Below is the verbatim transcript of Ankita Somani's interview on CNBC-TV18

Q: Have you revised your Earnings Per Share (EPS) targets for Infosys as well as your guidance or what you are working for in FY14 post this quarter's numbers?

A: Definitely, we have revised our numbers. Previously we were working with around 9-9.5 percent kind of a growth for this year, now definitely with the kind of results that the company has posted in this quarter the number goes onto 11 percent or probably 11.5 percent. So we have revised our revenue guidance. Also in terms of EPS for FY15 the EPS estimate was around Rs 206-207. The EPS estimate it seems can probably go up by another 3-4 percent and that will bring it to Rs 216 or so.

Q: What would be your call on the Infosys stock and what would be your pecking order in the IT names now?

A: In pecking order Tata Consultancy Services (TCS) still continues to remain one of the preferred bets. The valuations are rich as of now, but the kind of performance that the company is giving, every quarter it comes out with a positive surprise, operational exuberance from the company continues, so it is TCS, HCL Tech and after that it is definitely Infosys. My call on Infosys as of now is an accumulate with a target price of around Rs 3,500.

Q: How worried would you be about the qualitative issues such as management attrition in Infosys at the top level? Is that something which makes you a little apprehensive on maybe increasing your target price more aggressively for the stock?

A: Definitely it does. Senior management exits actually happened in this quarter. So even if we could see some impact we will be able to see it in the quarters coming ahead. That apprehension definitely remains the same, though the company is saying that they have a leadership team totally intact. We want to see healthy results and consistent results coming in from Infosys.

Also right now they have posted about 3.8 percent kind of dollar revenue growth on a sequential basis, while from TCS we are expecting around 5 percent plus. So there is still a gap which remains between Infosys and TCS and we want to see how the company actually goes ahead and bridges that gap.