Buy Infosys; target of Rs 800: HDFC Securities

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HDFC Securities' research report on Infosys

Infosys (INFY) posted strong revenue performance, robust large deal bookings and increased its FY19E rev guidance. However, operating performance was soft impacted by accelerated hiring, lower utilization (seasonality impact) and higher onsite-mix (large deal transition). Revenue came at USD 2,987mn, 2.7/10.1% QoQ/YoY in CC terms. EBIT margin was lower by 118bps QoQ to 22.6% impacted by lower gross margin, however EBIT% guidance maintained. APAT stood at Rs 39.26bn adjusted for Rs 4.51bn Skava impairment.

Outlook

We lower EBIT% factoring increased onsite hiring and higher sub-contracting, lower EPS est. by ~3%. Expect rev/EPS CAGR of 9.5/10.5% over FY18- 21E factoring USD rev growth at 7.8%, 10.8%, 10.0% and EBIT margin at 23.4/23.7/23.7% for FY19/20/21E, respectively. Growth est. imply CQGR of 2.5/2.6% for FY20/21E. Maintain BUY with TP of Rs 800, 18x Dec-20E-EPS.

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