Deutsche Bank has maintained a hold rating on the stock with a lower target of Rs 970. The research firm has cut its earnings forecast by 8-9 percent owing to slow growth and a drop in margin. Furthermore, it said that the weak Q4 and guidance are disappointing, but not conservative. The company’s FY18 constant currency guidance implies that it is adding incremental revenue of USD 6-80 million per quarter.
The research firm expected Infosys to deliver 7 percent constant currency revenue growth in FY18 with EPS of Rs 61.4. Moreover, the increased dividend payout does little to mask the frailties in business performance. There could be a further upside based on meaningful improvement in growth outlook and execution.
Jefferies has a buy call on the stock with a lower target price of Rs 1,100 from Rs 1,220. The global research company believes that the IT major’s guidance implies that recovery was still a while away and translates into revenue growth of 6.1-8.1 percent year on year.
Growth could be stable for the firm, but a recovery in growth is not implied in guidance, it said. The downward resetting of EBIT margin band to 23-25 percent is a bigger disappointment, it feels.
Infosys’ payout policy is not a major change and that the buyback will provide support, Jefferies said. On risks, it feels that weakening macro, higher competition and stronger rupee are key risks.
Bank of America Merrill Lynch has reiterated its neutral rating on the stock with a lower target of Rs 1,000 from Rs 1,050. It cut FY18/19 earnings per share by 8 percent and believes that the consulting segment is likely to remain a drag on FY18 growth.
The company’s cash return announcement is now a key support at current price amid muted earnings growth in FY18. The USD 2 billion buyback/dividend program implies a further yield of 6 percent in FY18.
Titan
Morgan Stanley has reiterated its overweight call on the stock with an increased target price to Rs 550 from Rs 530. Analysts at the firm remain 11-13 percent above consensus for FY18-19 earnings. It also raised FY17-19 earnings by 4 percent each, incorporating strong Q4 results.
The research firm forecasts FY17 jewellery segment revenue growth of 18 percent against 15 percent. It sees an overall FY17-19 earnings CAGR of 21 percent.
Among key policies, it expects the government to levy a 5% GST on Jewellery.
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