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Research
Infosys Ltd - 1QFY2018 Result Update - Angel Broking
Posted On : 2017-07-23 09:29:37( TIMEZONE : IST )
Infosys posted better than expected results for 1QFY2018, mainly driven by better than expected volume growth during the quarter. On sales front, the company posted a 3.2% sequential growth in USD revenues to US$2,651mn v/s. US$2,657mn expected, mostly volume lead. In constant currency (CC) terms, the company posted a 2.6% qoq growth. EBIT margin came in at 24.1% v/s. 23.6% expected, a qoq dip of 50bps. Consequently, Adj. PAT came in at Rs. 3,534cr v/s. Rs. 3,443cr expected, de-growth of 1.9% qoq. For FY2018, the company has kept the guidance of 6.5-8.5% CC growth and EBIT margin guidance of 23-25%. We maintain our Buy rating on the stock with a target price of Rs. 1,179.
Quarterly highlights: On sales front, the company posted a 3.2% sequential growth in USD revenues to US$2,651mn v/s. US$2,657mn expected, mostly volume lead. In constant currency (CC) terms, the company posted a 2.6% qoq growth. In terms of geography, in CC terms, USA, Europe, India and ROW posted a qoq growth of 1.3%, 3.1%, 11.2% and 6.9% respectively. EBIT margin came in at 24.1% v/s. 23.6% expected, a qoq dip of 50bps. Impact of wage hikes and visa expenses, apart from rupee appreciation were the major drag on profitability. However, the fall was lower than expected on the back of better than expected volume growth. Consequently, PAT came in at Rs. 3,534cr v/s. Rs. 3,443cr expected, de-growth of 1.9% qoq. Adj. PAT posted a qoq dip of 1.9%. During the quarter, it had written down the entire carrying value of the investment in its associate DWA Nova LLC, an Infosys Innovation Fund Investment (Rs. 71cr).
Outlook and valuation: For FY2018, Infosys has reiterated the revenue growth guidance in the range of 6.5-8.5% in CC terms, while EBIT is expected to be around 23-25%. We maintain our BUY rating on the stock.
Shares of INFOSYS LTD. was last trading in BSE at Rs.979.9 as compared to the previous close of Rs. 969. The total number of shares traded during the day was 120030 in over 4058 trades.
The stock hit an intraday high of Rs. 982.5 and intraday low of 971. The net turnover during the day was Rs. 117347337.
