Infosys Ltd - Q2 FY13 Result Update - IIFL

- Dollar revenue disappoints despite strong volumes; Offshore pricing corrects

- Barring BFS vertical, growth was broad based across verticals/services

- OPM performance materially below estimates; Salary hikes to take effect in H2 FY13

- Guidance largely in-line; H2 FY13 implied growth rate demanding

- Revise estimates to include Lodestone; Stock expected to remain range bound; Maintain MP

Infosys' Q2 FY13 results were unimpressive from various perspectives especially the weaker than expected revenue/OPM performance. Softness in its offshore pricing also indicates increased competitive pressure. On the flip side, we do note the positives of good deals wins, increasing traction in IMS and its platform business and growth in its Consulting/SI order book. Overall we remain circumspect of the Company's near term growth prospects (both in absolute terms as well as relative to peers like TCS/HCLT) considering its discretionary services and BFS exposure. Post incorporating the Lodestone acquisition we estimate dollar revenues/rupee earnings to grow at 10%/9% CAGR over FY12-14. Valuing the company at 14x FY14E earnings we maintain our 9-month TP of Rs2,400. Assign MP.

Source : Equity Bulls

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