Buy Infosys; target of Rs 3250: Dolat Capital

Dolat Capital is bullish on Infosys and has recommended buy rating on the stock with a target of Rs 3250 in its January 11, 2013 research report.

“Infosys delivered better than expected topline growth of 6.3% QoQ for Q3FY13 at $ 1.9bn as against our estimate of 3% growth QoQ. The revenues in reported currency grew by 5.7% QoQ to Rs 104bn (DE at Rs 100bn). Profit were in line at Rs 23.7bn (flat QoQ) but were considerably better than consensus estimate of 4% QoQ decline. Infosys recorded 5.8% QoQ growth in constant currency terms and 3.6% QoQ excluding the Lodestone acquisition. More importantly, it has recorded broad based growth across verticals (BFSI – 6%, RCL – 6.2%, ECS – 7.1% QoQ in CC terms) and geographies (Europe 14.4%, India 44.7% and ROW 7.4% QoQ in CC terms).”

“Management commentary tone has turned relatively positive and much more confident in terms of achieving its guidance despite challenging environment. We believe the articulation in terms of quantitative reporting of pipeline added was encouraging as it provides much needed visibility – It reported 8 large wins amounting a TCV of over $731mn. It has witnessed a sharp uptick in realized pricing of about 3.2%, during the quarter; after a cumulative decline of about 5% in last 4 quarters prior to Q3. The pricing uptick can be largely attributed to favorable portfolio mix in revenues driven by strong growth in Consulting and SI business segment (up 15% QoQ accounting about 32.6% of revenues).”

"We believe the result has met all the positive qualitative aspects that provide comfort in terms of expecting a strong business recovery by Infosys. We believe the result further reinforces our view of growth rate convergence among the top 5 Indian vendors in FY14 as stated in our earlier report post the announcement of Cognizant 8k filing for stock vesting plan. We maintain our positive view on the stock with an Accumulate rating on the stock with a TP of Rs 3250 (revised upward from Rs 2750) valued at 15x of FY15E earnings,” says Dolat Capital research report.

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