Views on Infosys 2QFY2016 Results: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - IT, Angel Broking) on Infosys 2QFY2016 Results:

"The company posted results better than expected on top-line and net profit, whereas the EBIT margins came in just in line with expectations.

The company posted a 6.0% sequential growth in USD revenues to US$ 2,392mn V/s US$ 2,339mn expected. In Constant Currency (CC) terms, the company posted a 6.9% qoq growth. The volume growth during the quarter came in at 3.7% qoq. In rupee terms, revenues came in at INR 15,635cr V/s INR 15,204cr expected, up 8.9% qoq. EBITDA margin came in 27.8% V/s 27.6% expected, an expansion of ~165bp qoq. The EBIT came in at 25.5% just in line with expectations, expansion of ~152bps. Consequently, PAT came in at INR 3,399cr V/s INR 3,345cr expected, a rise of 12.2% qoq.

In terms of geography, USA grew by 6.2% qoq CC, Europe grew by 8.3% qoq CC, India grew by 12.1% qoq CC and ROW grew by 7.1% qoq CC. In terms of domain, the FSI ( Banking & Financial Services) grew by 6.4% qoq CC, MFG (Manufacturing) grew by 5.8% qoq CC, RCL ( Retail and Life Sciences) grew by 8.2% qoq CC and ECS ( Energy, Utilities, Communication and Services) grew by 7.8% qoq CC.

On the operating matrix, the utilization rate excluding trainee was 81.3% V/s 80.2% in 1QFY2016, while including trainee was 75.4% V/s 75.7% in 1QFY2016. The attrition rates were 19.9% V/s 19.2% in 1QFY2016. Client additions during the quarter were 82. During the quarter, the company added 5 large deals with TVC of US$ 983mn.

In terms guidance for FY2016, on CC terms has been unchanged at 10-12% and dollar guidance has been revised downwards to 6.4-8.4% V/s 7.2-9.2% earlier. The revision in the US$, is mainly on the outlook of the company on the currency front. The company has also mentioned that it expects 2HFY2016 is weaker than 1HFY2016, and also that it is witnessing headwinds in some client accounts. We maintain our ACCUMULATE rating on the stock with a target price of INR 1,306."

Shares of INFOSYS LTD. was last trading in BSE at Rs.1167.85 as compared to the previous close of Rs. 1132.45. The total number of shares traded during the day was 363649 in over 10849 trades.

The stock hit an intraday high of Rs. 1172.6 and intraday low of 1133. The net turnover during the day was Rs. 419518551.

Source : Equity Bulls

Keywords