Accumulate Infosys; target of Rs 2875: PINC Research

PINC Research is bullish on Infosys and has recommended accumulate rating on the stock with a target of Rs 2875 in its April 13, 2012 research report.

“Infosys, for Q4FY12, USD revenues were 1,771mn (-1.9%QoQ) against company’s guidance of USD1,806-1,810mn and much lower than our estimate of USD1,824mn. INR revenues declined 4.8%QoQ to 88,520mn. EBIT margin dipped 128bps to 29.9% mainly due to appreciation of rupee during Q4. PAT declined 2.4%QoQ to Rs23,160mn and EPS for Q4FY12 was Rs40.5. During Q4, overall volume and pricing declined by 1.5%QoQ and 1.1%QoQ respectively. For FY12, USD revenues grew 15.8%YoY to 6,994mn against company’s guidance of 16.4% growth.”

“North America (62.4% revenue contribution) declined 3.9%, Europe (23.1% revenue contribution) grew 0.2%QoQ and India declined 6.6% QoQ. BFSI (34.3% revenue contribution) declined 4.7%QoQ, manufacturing (21.3% revenue contribution) grew 2.4%QoQ, retail & life sciences (22.9% revenue contribution) declined 2.8%QoQ, Energy &Utilities (21.5% revenue contribution) declined 0.6%QoQ. The company had the highest no of client additions ever in a quarter at 52, taking the total client base to 694. Infosys signed 5 major deals in the quarter of which 3 were over USD100mn+. Top client and Top 10 clients declined 1.9% and 2.3%QoQ respectively.”

“Infosys had a gross addition of 10,676 employees taking the total headcount to 149,994. For FY13, company would be doing a gross hiring of 35,000 employees including 13,000 for BPO. Infosys has decided not to award any salary hikes as of now and would be considering wage increases in mid year based on the growth visibility then. Attrition declined 70bpsQoQ to 14.7%. Including trainees, utilization decline by 270bpsQoQ to 67.2%. Infosys has guided for 8-10%YoY revenue growth in USD terms for FY13, which is much lower than the 11-14% growth forecast for Indian IT industry by NASSCOM. We maintain ‘Accumulate’ recommendation on the stock with a target price of Rs 2875 based on PER multiple of 17x on 18 months forward earnings,” says PINC 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