Sharekhan's research repor on Infosys
Q2 was another stellar quarter, with revenue and margin significantly beating estimates, along with strong deal TCVs, account expansion, and strong FCF generation; EBIT margin improved 268 bps q-o-q to 25.3%. Infosys raised revenue growth guidance to 2-3% in CC terms from 0-2% earlier and surprised us with better-than-expected upward revision in operating margin guidance to 23-24% (from 21-23% earlier) for FY2021. We believe that scaling up digital services, higher automation, increasing offshore revenue and pyramid rationalisation would help Infosys to partially offset costs that would return post normalcy.
Outlook
We maintain our Buy rating on Infosys with a revised price target of Rs. 1,350 as we expect company to clock industry-leading growth in the next couple of years.
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