Buy Infosys; target of Rs 1151: Geojit BNP Paribas

Geojit BNP Paribas' research report on Infosys

Infosys has reported a good set of numbers in Q2FY17 with consolidated revenue increasing by 3.1% QoQ (↑13.5% YoY in H1FY17) to Rs17,310cr in INR terms (USD growth of 3.5% and 3.9% in CC) owing to strong focus on execution. Volume growth stood healthy at 4% QoQ. All geographies witnessed steady growth led by India up 28.7% QoQ in CC, followed by RoW (↑5.2%), Europe (↑3.7%) and North America (↑2.7%). Client addition also remain notable as the company added 78 new clients during Q2FY17 taking the total active clientele to 1,136. Deal wins remained strong at USD1.2bn as against USD809mn in Q1FY17.

Factoring in lower growth in H1FY17 and cut in guidance, we have lowered our revenue and PAT estimates by 2.5/4.7% and 6.2/7.8% respectively for FY17E/FY18E. However, Infosys's robust momentum in deal wins, strong client mining capabilities and focus on automation will drive growth ahead. We maintain our ‘BUY’ rating on the stock with a revised target price of Rs1,151 (based on 17x FY18E P/E), implies a potential upside of 13%.