Angel Broking neutral on Infosys
Brokerage house Angel Broking has maintained a 'Neutral' rating on Infosys in its July 12, 2013 research report.
July 13, 2013 / 14:40 IST
Angel Broking's research report on Infosys
"Infosys reported healthy set of results for 1QFY2014. The company's dollar revenues grew by 2.7 percent qoq, aided by 4.1 percent qoq volume growth led by recovery in application development and consulting revenues. Infosys maintained its FY2014 USD revenue growth guidance at 6-10 percent as against our expectation of reducing it down to 6-8 percent, which is encouraging. We believe a healthy 1QFY2014 performance increases the probability of achieving/beating the top end of the guidance.""For 1QFY2014, Infosys reported revenue of USD1,991mn, up 2.7 percent qoq. Revenue in constant currency (CC) terms came in at USD2,005mn, up 3.4 percent qoq. In INR terms, revenue came in at Rs 11,267cr, up 7.8 percent qoq. The company's EBITDA and EBIT margin inched up slightly by 2bp and 9bp qoq to 26.5 percent and 23.6 percent, respectively as the gains from rupee depreciation got absorbed due to negative impact of wage hike given to sales team from May 2013 and onsite wage hikes given in February 2013. The PAT was held up at Rs 2,374, down 0.8 percent qoq."Outlook and valuation: "The Management commentary indicates that the environment remains challenging and the company continues to see pricing pressure in large deals coming in re-bid market space because of competitive intensity. Management indicated that these deals are margin dilutive in the beginning but become margin neutral going ahead. Over FY2013-15E, we expect USD and INR revenue CAGR of 9.2 percent and 12.6 percent, respectively. Management indicated that the company has given ~8 percent offshore and ~3 percent onsite wage hike from 1 July, 2013 which will impact the operating margin negatively by ~300bp in 2QFY2014. The stock has ran up significantly today on the back of better than expected 1QFY2014 performance and at the CMP of Rs 2,803, the stock is trading at 16.4x and 14.8x its FY2014E and FY2015E EPS, respectively. We value the stock at 15x FY2015E EPS of Rs 189.4, which gives us a target price of Rs 2820. We maintain our Neutral rating on the stock," says Angel Broking research report.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. 
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