Buy Infosys; target of Rs 1419: Edelweiss

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Edelweiss' research report on Infosys

Infosys’ USD2,805mn revenue (up 1.8% QoQ in USD, 0.6% in CC) and 24.7% margin in Q4FY18 came in line with Street’s estimates. Key highlights: i) 6-8% FY19 CC revenue growth guidance versus 5.8% in FY18; ii) however, margin guidance was pruned to 22.0-24.0% (24.3% in FY18) due to investment in digital business, which we believe will help Infosys gain market share; iii) strong deal momentum with USD905mn/ USD3bn TCV deal wins in Q4FY18/ FY18; and iv) USD2bn cash to be distributed to shareholders in FY19, over & above regular dividend.

Outlook

We cut FY19E and FY20E EPS 0.7% and 4.2%, respectively, as: i) investments  in building sales and digital capabilities will lead to 90bps and 70bps margin dilution, respectively; and ii) INR130bn payback to shareholders reduces other income. We maintain ‘BUY/SO’ with revised TP of INR1,419.For all recommendations report, click here

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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