Views on Infosys 4QFY2016 Results: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - IT, Angel Broking) on Infosys 4QFY2016 Results:

Infosys (CMP: INR 1,172/ TP: INR 1,347 / Upside: 14.9%)

"Infosys posted revenues of US$2,454mn V/s US$2,446mn expected with 1.6% QoQ growth. In rupee terms, revenues grew by 4.1% QoQ to INR 16,550cr V/s INR 16,568cr expected, lead by rupee deprecation. On the constant currency terms CC growth has been around 1.9%. The volume growth during the period has been 2.4% QoQ. In terms of geography, North America grew by 0.5% sequentially; and 0.6% in constant currency, Europe grew by 2.4% sequentially; and 3.6% in constant currency, India grew by 9.1% sequentially; and 11.1% in constant currency, while Rest of the world grew by 4.0% sequentially; and 3.2% in constant currency.

In terms of Industries, FSI declined by 0.3% sequentially; and grew by 0.2% in constant currency, MFG & Hi-Tech grew by 1.0% sequentially; and 0.8% in constant currency, RCL grew by 2.4% sequentially; and 2.7% in constant currency and ECS grew by 4.6% sequentially; and 4.9% in constant currency.

On the operating front, the EBIT margins came in at 25.5% v/s expectations of 25.2% and 24.9%, a 60bps QoQ expansion. The utilization levels (including trainees) improved to 74.7% V/s 74.2% in 3QFY2016, while the attrition rates were 17.3% V/s 18.1% in 3QFY2016. On the net profit front, the company posted a net profit of INR 3,597cr V/s INR 3,634cr expected, posting a QoQ growth of 3.8%.

On client addition front, the company added 89 clients during the quarter. There was one US$100mn+ and 3 in US$75mn+, and one in the US$50mn+ client addition. Overall, the deal wins totaling TCV of US$757mn. On FY2017 the company has given revenue guidance at 11.5%-13.5% in constant currency and 11.8%-13.8% in US$ terms at March 31, 2016 exchange rates. Board also recommended a final dividend of INR 14.25/share. We maintain our BUY rating on the stock with target price of INR 1,347."

Shares of INFOSYS LTD. was last trading in BSE at Rs.1238.8 as compared to the previous close of Rs. 1172.05. The total number of shares traded during the day was 753862 in over 29252 trades.

The stock hit an intraday high of Rs. 1267.9 and intraday low of 1233.45. The net turnover during the day was Rs. 940718527.

Source : Equity Bulls

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