Buy Infosys; target of Rs 840: Dolat Capital

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Dolat Capital's research report on Infosys

The USD revenue rose 2.3% QoQ (2.7 % QoQ CC terms) to USD 2,987 million, (DCMe: USD 2,965 million), due to a healthy growth in US and Europe, despite headwind from cross currency movement. The INR revenue increased 3.9% QoQ to`214 billion (DCMe: `213.5 billion), helped by INR depreciation. The EBIT margin declined 109bps QoQ to 22.6% (DCMe: 23.5%), due to the negative impact of utilisation and onsite cost (- 80bps), salary hike (- 30bps), sales investment (- 30bps), acquisition cost (- 20bps), and Panaya amortization (- 40bps). All of these off set the positive impact of INR depreciation (+50bps) and lease rental income (+40bps). The PAT declined 12.2% QoQ to`36 billion (DCMe:`41.6 billion), on account of lower margins and a reduction in fair value of asset held for sale (Skava and Panaya).

Outlook

We maintain our BUY rating on the stock, with a TP of `840 based 17x rolling one - year fwd. PER.

For all recommendations report, click here

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