Wipro: We maintain ADD on Wipro, following a strong revenue performance (the best in nine years) and better-than-expected margin performance. Revenue growth of 3.4% QoQ CC was broad-based and 4Q growth guidance of +1.5-3.5% indicates continued growth momentum. The deal pipeline remains strong and the company won 12 deals of TCV greater than USD 30mn. The total TCV stood at USD 1.2bn, which includes Metro AG (TCV of USD 700mn). Wipro under the new structure will be more agile and will focus on accelerating growth, supported by large deal wins, leveraging partner ecosystem, and higher investments in talent. Key positives include (1) strong guidance, (2) pick-up in deal wins, (3) robust cash generation (OCF of ~149% of net income), and, (4) 246bps QoQ improvement in IT services margin. We increase our FY22/23E EPS by +6.6/6.3% and target multiple to 20x (vs. 18x earlier) to factor in better growth visibility. Our target price of Rs 470 is based on 20x Dec-22E EPS (~20% discount to INFY). The stock is trading at 23.2/20.8x FY21/22x EPS Infosys: We maintain BUY on Infosys (INFY), following a strong 3Q print (best 3Q in 8 years) and the highest-ever deal wins translating into growth leadership in tier-1 IT. TCV of large deal wins (including largest-ever Daimler deal) stood at USD 7.1bn (net new TCV at USD 5.2bn). Growth in 3Q was led by NorthAm-BFSI (Vanguard ramp-up), E&U;, Life sciences vertical and NorthAm-Manufacturing/Communications. INFY scores high on growth visibility based on a staggering 3.5x growth in 9MFY21 net-new large deal TCV over the...

We recommend BUY and assign 26x P/E multiple to its FY23E earnings of Rs. 63.1 per share which gives a TP of Rs. 1,666 per share, an upside of 20%.

Infosys (INFO) reported constant currency (CC) USD revenue growth of 5.3% QoQ (v/s our estimate of 3.2%) in 3QFY21. This is its best QoQ growth in the last eight years. Growth was broad-based across verticals and regions. In 9MFY21, revenue (USD)/EBIT/PAT grew by 3.8%/26%/16.4%. The company reported its best ever TCV of USD 7.1b (net new wins of 73%), 2x book-to-bill, and above the combined TCV of the last three quarters....

Blockbuster TCV and net new likely to drive mid-teen FY22 growth While there are many aspects of Infosys' 3QFY21 performance that seem superlative, none is greater than the highest ever large deal TCV number of US$7.1bn, of which 73% was net new. This includes the largest ever deal in the history of Indian IT Services industry (Daimler deal worth ~US$3.2bn spread over 8 years, according to media). TTM net new TCV is up 2.8x YoY and should drive mid-teen growth in FY22, which should support the elevated valuation. 3QFY21 QoQ revenue growth in CC terms came at an 8-year high of 5.3% (against our estimate of 2.5%) with the Vanguard deal kicking in. Margin held up (against expectation of a decline)...

Infy reported phenomenal revenue growth of +5.3% QoQ CC, beating our expectations by 2.4%. Growth beat was driven by revenue gains by strong deal TCV of 1HFY21 and earlier quarters. Digital revenues grew by 31.3% YoY CC and contributing to 50.1% to total revenues (vs 47.3% in 2Q21 and 44.5% in 1Q21). Revenue growth was broad based led by 9.8% QoQ USD rise in BFSI (led by ramp up of Vanguard deal) 10.8% QoQ USD rise in Life Sciences and 8.5% QoQ rise in Manufacturing. Infy posted a strong margin of 25.4% (Ple: 24.9%, Cons:25.1%). Improving onsite pyramid, offshore and nearshore mix,...

Digital acceleration, large deal continue to be growth drivers We believe the technology sector will witness multi-year growth in coming years led by traction in digital technologies. Infosys is in a sweet spot to capture this growth considering the investment it has made in digital technologies. This, coupled with increase in outsourcing in the US and Europe, vendor consolidation opportunities, captive carve outs and cost take out deals will further boost its revenues. In addition, Infosys has executed well on large deal conversion and is expected to be a key driver of...

Infosys delivered another stellar quarter, beating our and consensus estimates on revenues and margins. Revenues grew 6.2% QoQ (highest in Q3 in 8 years) to USD3.5bn. Digital revenues rose 12.4%/33.8% QoQ/YoY, contributing over 50% of overall revenues. Infosys raised its FY21 revenue growth guidance to 4.5-5% in cc terms (earlier 2-3%) and EBITM guidance range to 24-24.5% (earlier 23-24%) based on 9M performance and robust deal wins. Revenue guidance implies 0.5-2.5% QoQ growth in Q4. signed in YTD FY21 was ~USD12bn (+63% YoY) with net new deal wins of USD8.2bn (~3.3x YoY). The deal pipeline is healthy (tad lighter after strong conversions in Q2/Q3)....

Infosys' (INFO) Q3FY21 dollar revenue growth of 6.2% QoQ beat our estimate of 3.5%, with the company also posting its highest-ever TCV of US$ 7.1bn.

Rising adoption of smartphones, high internet speed and social distancing (due to Covid-19) has changed consumer behaviour. Consumers now prefer to transact (buy a product) virtually over the smartphone via an app instead of physical transaction. This has led to virtualisation of business models. In addition, to keep business up and running in a work from home scenario, technology is gaining traction. As a result, new age technologies like cybersecurity (to protect business from work from home scenario), app development (to help customer transact virtually) and Cloud (to enable...

We recommend BUY and assign 24x P/E multiple to its FY23Eearnings of Rs. 58.5 per share which gives a TP of Rs. 1,404 per share, an upside of 15%.

Infosys has not announced size of the deal but we expect the size to be substantial as it involves multiple deliverables. Daimler and Infosys Announce Strategic Partnership to Drive Hybrid Cloudpowered Innovation & IT Infrastructure Transformation in the Automotive...

We attended Infosys (INFO)'s Analyst Day, wherein the management shared their views on the industry outlook and drivers for future revenue and margin expansion. Here are the key highlights from the meet: Overall, the commentary from Infosys was quite positive as the management expressed a) their confidence about returning to pre-COVID growth levels; b) scope for a further upside on operating margins; c) significant opportunity from the shift to cloud; d) acceleration in the deal pipeline since the pandemic. It further highlighted the ambition to eventually have 33% of the workforce...

Incrementally the analyst meet held yesterday threw up the following (1) a peek into FY22 revenue growth outlook with Infosys aspiring to go back to the near double digit revenue growth momentum that it saw in FY20. Should market be benign, there could be further acceleration (2) unlike in the past when it stayed away from any medium-term margin outlook, Infosys yesterday said that it is looking to become a more profitable entity. We are already building in a ~11% US$ revenue growth and a 23.3% EBIT margin in FY22. While the latter is a 60bps decline against FY21 margin, it is ~200bps higher than the FY20 margin of 20.3%. This margin outlook gels with our sectoral thesis that FY21 represents (at least for the next few...

We recommend BUY and assign 24x P/E multiple to its FY23E earnings of Rs. 56.4 per share which gives a TP of Rs. 1,350 per share, an upside of 20%.

Large deals, digital key growth driver for company Infosys at its analyst meet highlighted that the pace of digital acceleration has increased after Covid. The key digital technology is gaining traction are cloud (US$500 billion opportunity over the next three years), data, AI, cybersecurity, platforms, IOT and modernisation of apps. In the next four to five years every major companies are expected to migrate to cloud. Further, the company highlighted that digital, large deals, client mining and opening of new accounts are expected to be key revenue drivers. Infosys has signed...

Profitability in good situation: The company believes that its investment phase is now behind and thus can leverage growth and many of its structural drivers hereon. It believes that several of the existing cost reduction factors such as Travel, Visa, Facilities expenses, Professional charges, Brand buildings may only go back to pre-pandemic level in a gradual manner and would continue to provide support in near term (although beyond control). Sustained remote working would lead to more savings in terms of better talent availability, improved productivity and...

Our target price of Rs 1,230 is based on 23x Sep-22E EPS (15% discount to TCS) with EPS CAGR at 14% over FY20-23E. Infosys: We maintain BUY on Infosys (INFY), following a strong 2Q print across revenue, operations and deal wins translating into growth leadership in FY21. Increase in revenue guidance to 2-3% CC for FY21 and margin guidance increase to 23-24% reflect 2Q outperformance and growth visibility for 2H. Growth visibility is predicated on (1) strongest-ever deal wins with large deal TCV at USD 3,145mn comprising USD 2,705mn in new wins (including Vanguard deal), (2) strong commentary on BFSI vertical (five large deal wins ex-Vanguard), Life-science & Hi-tech verticals and recovery in Retail & CPG vertical (three large deals), (3) better supply-side indicators of a wage increase, local hiring program (margin implications), and (4) traction in digital (47.3% of revenue and 25.4% YoY CC), supported by industry tailwinds of cloud migration/DX projects and vendor consolidation.