Prabhudas Lilladher's research report on Infosys
INFY reported another strong quarter with revenue of US$ 4.9 bn, up 3.1% QoQ CC (in-line of PLe & above cons. est. of 2.9% QoQ CC). Manufacturing & Europe led growth in Q2; aided by In-Tech integration led the growth. EBIT margin was flat at 21.1% vs PLe & cons. est. of 40 bps & 30 bps improvement due to higher amort. & variable pay headwinds offset by project maximus gains & currency benefits. Lumpy nature of wins kept large deals wins at US$2.4 bn vs US$ US$ 4 bn in Q1. Strong H1 performance, deal pipeline, & traction in below US$ 50 mn deals has led to revision of revenue guidance to 3.75-4.5% CC growth while the margin guidance is maintained at 20-22%. INFY reported another quarter of broad-based growth with continued momentum in the key verticals and geographies, part of the growth (0.8% QoQ) was led by In-Tech integration. The sub-segments within Fin Services have recovered meaningfully in Q2, partly aided by improving spends on the discretionary areas.
Outlook
We estimate USD revenues/earnings CAGR of 8.1%/12.1% over FY24-FY27E. The stock is currently trading at 24x FY27E, we are assigning P/E of 27x to FY27E with a target price of INR 2,260. We maintain BUY.
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