Views on Infosys 3QFY2016 Result: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - IT, Angel Broking) on Infosys- 3QFY2016 Results:

Infosys (CMP: INR 1,082/ TP Under Review: Buy / Upside :

"Contrary to expectations, Infosys has delivered a robust numbers. During 3QFY2016, company posted a 0.6% sequential growth in USD revenues to US$2,407mn V/s US$2,368mn expected. On constant Currency (CC) terms, the company posted a 1.1% QoQ. In rupee terms, came in at INR 15,902cr V/s INR 15,610cr expected a QoQ growth of 1.7% QoQ. Volume growth during the quarter was 3.1% QoQ. The volume growth was driven by more onsite which grew by 4.4% QoQ, while the offshore volume growth was 2.5% QoQ.

In terms of geography, North America posted a 0.5% CC growth, Europe posted a 3.9% QoQ CC growth, India posted a 24.3% QoQ CC growth and ROW posted a 0.3% QoQ CC growth. In terms of Industry, FSI posted a 3.1% QoQ CC growth, MFG posted a 3.2% QoQ CC growth, RCL posted a 0.1% QoQ CC growth and ECS posted a 4.6% QoQ CC growth.

In terms of client addition, the company added 4 clients in the US$25mn+ and one in US$50mn+. During the quarter, they have added overall 1045 active clients; the Management is upbeat about the future prospects, with strong order book position, which is guided towards US$3bn. Also, the management has guided towards a higher guidance for FY2016, 12.8-13.2% in CC terms and 16.2-16.6% in INR terms, on exchange rates as on 31st Dec'2015 (INR 66.16/ US$). The earlier guidance was 10-12% in CC terms for FY2016.

On operating front, the EBITDA margins came in at 27.2% V/s 27.0% expected with a downtick of 68bp QoQ, on back of pricing decline which dipped by QoQ 2.5% and lower utilization. The utilization level was 74.2% (including trainee) and 80.6% (excluding trainee). Attrition (annualized consolidated) during the quarter was 18.1% V/s 19.9% in 2QFY2016. Consequently, PAT came in at INR 3,465cr V/s INR 3,251cr expected, a growth of 2.0% QoQ. We maintain our BUY rating on the stock with price target to be revised upwards."

Shares of INFOSYS LTD. was last trading in BSE at Rs.1121.65 as compared to the previous close of Rs. 1139.1. The total number of shares traded during the day was 210916 in over 9135 trades.

The stock hit an intraday high of Rs. 1145 and intraday low of 1116.6. The net turnover during the day was Rs. 237818323.

Source : Equity Bulls

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