September 02, 2016 / 12:50 IST
Religare's research report on Infosys
INFO has reiterated its ‘renew+new’ strategy and indicated that its software amplified service strategy is progressing well. Management said that platforms such as MANA (four clients live) are seeing good traction. The new services portfolio with a dedicated overlay sales team grew 40% QoQ in Q1FY17, albeit off a small base. Large deals (US$ 800mn in Q1) and account mining metrics (average size of top-10 accounts at US$ 217mn) continue to improve. Title holder attrition was low at 4.9% in Q1.
On the whole, INFO’s management was upfront about the pressures in traditional service areas, but we like the company’s strategy and do believe that it has the leadership team to execute the same. We expect the near-term share price performance to remain sluggish given concerns over FY17 guidance and the impact of Brexit on decision making. These factors will add to near-term volatility in the sector but we think INFO’s valuations are inexpensive at 14x FY18E P/E. BUY.
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