Barclays ups Infosys FY17 $ rev target to 14%; stock gains

Barclays feels that focus on large clients, 43 percent increase in the size of its sales force over FY15 and rupee depreciation will lead to near-term revenue acceleration.

September 18, 2015 / 16:26 IST

live

bselive
nselive

Volume

Todays L/H

Moneycontrol Bureau

Barclays is bullish on Infosys and has increased FY17 USD revenue growth estimates to 14 percent. However, its FY18 estimates still remain at 12.8 percent awaiting an acceleration in large contract signups. The brokerage has also raised its target price to Rs 1320 per share with an overweight rating on the stock. Shares of the IT company was up 1.5 percent intraday on Friday.

Barclays feels that focus on large clients, 43 percent increase in the size of its sales force over FY15 and rupee depreciation will lead to near-term revenue acceleration.

"Rupee’s recent depreciation should help the company manage its EBIT margins in the guided range of 24-26 percent. Sharper revenue growth should also help valuations," it says.

However, Barclays also warns that company’s aggressive acquisition strategy increases its risk profile. In its 2020 vision, Infosys targets USD 20 billion revenues of which USD 2 billion will come from new initiatives (like AiKiDo). Further, the management led by Vishal Sikka is willing to spend USD 6.5-8.0bn on acquisitions over the next five years to deliver an additional USD 1.5 billion of revenues in 2020.