Published on 13/04/2019 10:18:37 AM | Source: HDFC Securities Ltd

Weak guidance, skewed performance - HDFC Securities

Posted in Expert Views| #Infosys Ltd #Expert Views #HDFC Securities

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Below is the views on Weak guidance, skewed performance  by Mr. Apurva Prasad and Amit Chandra, IT analyst, HDFC Securities.

Weak guidance, skewed performance    

Infosys 4QFY19    

(M-cap Rs 3,253bn, CMP 748, TP 805)    

* Infosys (INFY) posted in-line revenue (skewed vertical performance) and slightly lower margin performance while revenue guidance for FY20 was lower at 7.5 to 9.5% YoY (vs. 9% YoY CC in FY19). EBIT% guidance also lowered (expected) to 21 to 23% (vs. 22.8% for FY19).    

* 4Q revenue stood at USD 3,060mn, 2.4/11.7% QoQ/YoY CC (USD 3,063mn est) and EBIT% stood at 21.4%, -113bps QoQ (21.8% est, consensus at 22.2%). APAT came at Rs 39.80bn, 1.4/5.4% QoQ/YoY adj for Rs 0.93bn one-time reversal.    

* Positives include: (1) Growth in Digital 9.9% QoQ (>USD 1bn quarterly) and at 33.8% of rev, (2) Growth in large accounts (2 added to >USD 100mn bucket), (3) Large deal wins (USD 1.5bn TCV ~to 3Q). Key negatives include (1) Muted revenue guidance for FY20E, (2) Attrition (despite interventions), (3) Weak performance in core verticals of BFSI (-0.8% QoQ CC) and Retail (-0.9% QoQ CC). More details to follow post con-call (downside risk to growth est.)


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