Buy Infosys; target of Rs 1150: JM Financial

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JM Financial's research report on Infosys

Infosys (INFO) reported a modest 0.8% QoQ constant currency (CC) revenue growth in 3QFY18 with stable operative metrics. Management commentary on the outlook was optimistic even though the -0.6%-3.1% band for the implied 4QFY18 USD revenue growth guidance, widest in at-least the last 3 years, suggest a caution from any lag impact of the August 2017 events, in our view. Like TCS, INFO has done well on cost containment and while the common levers appear peaking, we expect margins to remain stable.

Outlook
The Our FY18/FY19 EPS estimates are broadly unchanged; the impact of lower other income (due to the recent buyback) has been largely offset by the reduced share-count + a lower effective tax rate post the recent Advanced Pricing Agreement (APA) with the US Internal Revenue Service (IRS). Maintain BUY; price target revised to INR 1,150 (INR 1,110 earlier).
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