Infosys Ltd - Soft quarter along expected lines - Emkay

Reco: BUY
CMP: Rs 3235
Target Price: Rs 4000

- Soft revenue performance along expected lines. EBIT margins improve by ~50 bps QoQ to 25.5% led by gross margin expansion. Better margins, forex gains drive net profit beat

- FY15 US$ Revenue guidance of 7-9% implies a 2.1-2.9% CQGR through next 4 quarters. Increase in dividend payout policy to 40% is positive in our view

- Operating metrics performance weak as expected. Annualized attrition inches up yet again to 22.6% (V/s 21.4% in Dec'13 qtr)

- Tweak our FY15/16E EPS a tad lower to ~Rs 218/249. Valuations remain attractive at 14.8x/13xFY15/16, however greater confidence on revenue growth recovery required for sustainable P/E re-rating ahead

Source : Equity Bulls

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