Limited Period Offer:Be a PRO for 1 month @Rs49/-Multiple payment options available. Know More

Buy Infosys; target of Rs 1560: YES Securities

YES Securities is bullish on Infosys has recommended buy rating on the stock with a target price of Rs 1560 in its research report dated April 14, 2021.

April 15, 2021 / 08:20 PM IST

YES Securities' research report on Infosys


Reported revenue of $3,613mn (up 2.8% QoQ reported and up 2% QoQ in CC terms). In INR terms, it reported revenue Rs 263.bn (up 1.5% QoQ), a slight miss on consensus estimate. It is to be noted that there was adverse impact of INR appreciation in reported INR revenue for the quarter; and also the revenue growth for the quarter was impacted by some time being taken in ramping up large deals. Digital revenue now accounts for 51.5% of revenue compared to 50.1% in Q3FY21 and grew 34.4%YoY in cc terms. EBIT margin declined by 94 bps QoQ to 24.5% on expected lines, led by wage hike in the quarter. Large deals win came in at $2.1bn (highest deal booking in 4th quarter over the last 3 years), led by strong traction in digital, cloud and data related technologies. LTM attrition came in at 15.2% vs 10% in Q3FY21 due to higher demand for talent in the market. Announced final divided of Rs 15/share, which along with interim dividend of Rs 12/share, comes to be Rs 27/share for FY21 (54% increase over FY20). Also announced share buyback of equity shares amounting to Rs 92bn, at a price not exceeding Rs 1,750/share.


Outlook


While the revenue performance was less than expected in the quarter, but robust deal booking and deal pipeline in digital, cloud and data offers strong revenue growth visibility for FY22 and ahead. It should be able to achieve stable operating margin for FY22, supported by positive operating leverage, even though, it faces headwind in terms of increased cost such as salary hikes and increased travel expense. Share buyback would restrict downside risk in the near term. The stock trades at 22.8x on FY23 earnings. Initiate coverage on the stock with Buy Rating.


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.

Broker Research
first published: Apr 15, 2021 01:59 pm
Sections