Infosys - Disappointing performance, cut to HOLD - Emkay

Reco: HOLD
CMP: Rs 2297
Target Price: Rs 2500

- Mar'13 qtr show came in way below est with a 1.4% QoQ US$ revenue growth with margins slipping by ~200 bps sequentially to 26.5%, declining for 5th qtr in a row

- Profits at Rs 23.9 bn (+1.1% QoQ) beat est aided by better other income/tax reversals. FY14 guidance below par with Q4 performance denting confidence on pick up ahead

- Cut FY14/15E EPS lower by 8/7% to Rs 161/181 on lower revenue/margin assumptions. Downgrade to HOLD, TP Rs 2500( V/s Rs 2,900 earlier) on 14x FY15 P/E

- See stock finding support at Rs 2,100-2,150 levels given ~5%+ FCF yield. We see Infosys continuing to trade at 'lower than historical / sector leader' multiples given continuous negative surprises to street expectations

Source : Equity Bulls

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