Published on 17/07/2017 11:02:06 AM | Source: Angel Broking Pvt Ltd
We maintain our BUY rating on Infosys Ltd - Angel Broking
Below is the view On Infosys Limited 1QFY2018 Results by Ms. Sarabjit Kour Nangra (VP Research- IT, Angel Broking):
Infosys (CMP: INR 976 / TP: INR 1,179/Upside: 20.8%)
“Infosys posted better than expected results 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. In rupee terms, revenues came in at INR 17,078cr V/s INR 17,131cr expected, down 0.2%. QoQ.
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. In terms of the Industry in CC terms, FSI, MFG & Hi-Tech, RCL and ECS posted a QoQ growth of 2.0%, 1.5%, 2.6% and 4.9% 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 for profitability. However the fall was lower than expected on back of better than expected volume growth. Consequently, PAT came in at INR 3,483cr V/s INR 3,443cr expected a de-growth of 3.3% QoQ.
During the quarter ended June 30, 2017, the Company has written down the entire carrying value of the investment in its associate DWA Nova LLC, an Infosys Innovation Fund Investment. The impact of write down on 1QFY18 net profit is INR 71cr. The write-down in the carrying value of this investment during the quarter ended March 31, 2017 was INR 18cr. Thus Adj. net profit posted a dip 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 INR 1,179.”
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