Buy Infosys: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Infosys and has recommended buy rating on the stock in its January 11, 2013 research report.

“Infosys reported Q3FY13 results ahead of PLe/consensus expectation in a challenging seasonally weak quarter. The company’s performance has delivered positive surprise across the line items. Moreover, the company’s guidance for FY13 US$ revenue has been revised ahead our/consensus estimates. We see stock price to go up by 10-12% due to strong result. Despite seasonality and wage hike the company delivered strong performance in the quarter.”

“Infosys’ revenue grew by 5.7% QoQ to Rs104.24bn for Q3Y13 (PLe: Rs100.76bn, Cons: Rs101.64bn) in Indian rupee term, whereas revenue in USD term grew by 6.3% to US$1,911m (PLe: $1,860m). The company reported an operating margin erosion by 66bps QoQ to 25.7% (PLe: 25.2%, Cons: 25.6%) due to wage hike and shutdowns. The company reported EPS of Rs41.46 (PLe: Rs38.80, Cons: Rs39.37), a muted growth. Revenue for NA, Europe and India grew by 1.6%, 16.6% (@cc 14.4%) and 44.7% QoQ, respectively, whereas in terms of vertical BFSI, Maunfacturing, and Retail grew by 6.4% (@cc 6%), 4.6% (@cc 4%) and 6.6% (@cc 6.2%) QoQ, respectively. Products (6.3% QoQ), IMS (7.9% QoQ) and Testing (3.9% QoQ) grew strongly. The pricing declined by 3.7% QoQ(Onsite: 3.7%, Offshore: 2.3%). It added 89 new clients including Lodestone. Utilization excluding trainees increased by 50bp to 70.1%, however trainee addition pushed including trainee utilization to 73.2.”

“Infosys has revised their US$ revenue guidance upward against our expectation of no change (includiing Lodestone. The new guidance in USD revenue growth is 6.5% for FY13 (PLe: 5%, Cons: 4.5-5%). Its rupee EPS guidance revised upward by 1.4% YoY to Rs162.8 (PLe: Rs159-160). We see strong uptick of 10-12% in the stock price due to strong result. We may revisit our estimates post conference call. Reiterate.BUY,” says Prabhudas Lilladher research report.

FIIs holding more than 30% in Indian cos

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