Buy Infosys; target of Rs 1265: Edelweiss

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Edelweiss' research report on Infosys

Infosys’ Q3FY18 revenue of USD2,755mn (up 1.0% in USD, 0.8% in CC terms), and operating margin at 24.3% were broadly in line with Street’s estimates. Barring BFS (down 1.6%), all other businesses posted modest numbers in an otherwise weak quarter. Key highlights: 1) New CEO, Mr. Salil Parekh, has taken over and will update on strategy in Q1FY19; 2) BFSI, retail and digital (25% of revenue) look strong for CY18. We had downgraded the stock in Aug 17 in spite of it being our top pick on management instability concerns. However, now with the new CEO in place, we reiterate that: 1) Infosys has highest margin levers; 2) high dividend yield; and 3) undemanding valuations.

Outlook
We reinstate our 16x multiple (from 14x), roll forward to FY20E and upgrade to ‘BUY’ with a revised TP of INR1,265 (INR1,010 earlier).
For all recommendations report, click here

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