Buy Infosys; target Rs 3000: P Lilladher
Prabhudas Lilladher is bullish on Infosys and has recommended buy rating on the stock with a target price of Rs 3000 in its January 11, 2013 research report.
January 14, 2013 / 14:59 IST
Prabhudas Lilladher is bullish on Infosys and has recommended buy rating on the stock with a target price of Rs 3000 in its January 11, 2013 research report.
"Infosys delivered one of the most comprehensive beat to the consensus expectation in recent times. Our hypothesis of improving deal wins, strong clients addition and flexibility to deal structuring likely to result in strong growth momentum, has played out well in the quarter. We believe the deals momentum that we have seen over the last two quarters is yet to be captured in growth completely. We expect agility on the deal front to improve the market share for Infosys in CY13.Revenue momentum to get better - Ramp-up scenario improving: Infosys reported organic revenue growth of 4.2% QoQ (incl. Lodestone: 6.3% QoQ) in USD terms. The growth was aided by some of the new deal ramp-ups. However, the company had ~20 transformational deal win over the last three quarters and expected to witness ramp-up over the next 2-3 quarters. The deal wins have still not fully captured in Q3FY13 performance. Hence, we expect momentum to get better in FY14. We see Q4FY14 guidance of 2.8% QoQ organic growth in USD terms as an indication of the same.Margin levers intact - Room for uptick despite headwinds: Despite wage hike, extended furloughs, lower working days and Lodestone drag, it reported EBIT margin decline of 66bps to 25.7%. Q4FY13 will have headwinds like promotions, onsite wage hike and Lodestone payout & integration, which could be mitigated by transformational deals ramp-up along with utilization improvement.Revising FY13 & FY14 estimates upward on higher revenue growth (Exhibit: 4). Pricing environment getting stable: In line with our expectation, the pricing is finally stabilizing. We expect improving business mix, better project execution (FPP) and higher growth from PPS to help withstand some pricing pressure, if there is any. However, we see bulk of pricing negotiation behind for Infosys.Valuation & Recommendation - Retain 'BUY', revise TP to Rs3,000: The guidance indicates improving revenue momentum for the company. We expect deal wins to improve FY14 momentum. We see a room for positive surprise on the margin in FY14. We revise TP to Rs3,000, 16x FY14e earnings estimate," says Prabhudas Lilladher research report.
FIIs holding more than 30% in Indian cos 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
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!
