Hold Infosys for better times ahead: Arihant Capital

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Arihant capital markets' report on Infosys

"Infosys has delivered good set of numbers with a top line growth of 0.8% qoq at $2,218mn. Rupee revenues increased 3.4% qoq to Rs 13,796cr, due to depreciation of all major currencies against USD. Company reported 4.2% qoq growth in volumes (best in 3 years) and of this offshore segment reported 4.4% growth, while onshore segment reported 3.7% growth qoq. Utilization level (ex-trainees) is at 11 year high of 82.7%. Company has aggressive hiring plans to avoid facing shortage of talent. Net addition during the quarter was 4,227 employees. Infosys and its subsidiaries added gross 59 clients during the quarter."

Outlook:"Infosys’s guidance for FY15E signifies the likely accrual of benefits coming from productivity improvement measures it has taken in recent times. Company is expected to benefit from tailwinds like improvement in utilization rates over long term and expansion of its innovative funds to provide financing to start-ups and new technologies like artificial intelligence. We believe Infosys deserve a re-rating thus we have assigned a higher PE of 19x (18.5x) to its FY16E earnings and have arrived at fair value of Rs 2,226 per share. At CMP Rs 2,074 stock trades at 17.7(x) its FY16E earnings. We have HOLD rating on the stock", says Arihant capital markets research report.

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