Buy Infosys; target of Rs 2770: Dolat Capital

Dolat Capital is bullish on Infosys and has recommended buy rating on the stock with a target of Rs 2770 in its July 12, 2012 research report.

“Infosys witnessed a sharp cut of 3.2% in its blended pricing (6 quarter low) owing to adverse portfolio mix with 5% QoQ fall in Consulting and SI revenues and few sporadic cuts offered to clients in the BFSI segment. Pricing cut completely negated gains of volumes growth (up 2.7% QoQ) and 10% ` depreciation (tailwind of about 400bps); leading to disappointing growth in PAT.”

“Management has build in sustained decline in pricing and has restated annual guidance of 6% growth in the constant currency terms which translates a 9% volume growth assumption for FY13, inline with guidance band at the beginning of the year. Sustained outlook on volume growth is encouraging but entails a risk of disappointment in coming quarters as it implies a 3.1% QoQ growth over next 3 quarters. Also, discontinuation of quarterly guidance highlights uncertainty in predictability. Infy witnessed 7% jump in receivables in USD terms (15% in ` terms) QoQ; taking the total DSO to 89 days (78 days in Q1FY12). It also had a major shift in its Investments- allocated about ` 25bn in MF and Govt bonds. We have cut our FY13 USD Revenue estimates by 4% but retains our EPS outlook owing to higher Fx reset. Maintain BUY and sector underperformer on the stock,” says Dolat Capital research report.   

Shares held by Mutual Funds/UTI

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment

Read More