25 February 2019 Even as INFOs revenue growth improves its FY19 EBIT margin exit at ~22- 22.5% followed by wage hikes in 1QFY20, pose a risk to consensus EBIT estimate of 23.4% for FY20. This is a key concern weighing on the stocks attractiveness. INFOs recent revival under Mr. Salil Parekh in revenue growth (from 4.6% constant currency (CC) in 2QFY18 to 10.1% CC in 3QFY19) came with an EBIT margin decline of 120bp, despite the INR/USD depreciating 11% during the same period. The trend is remarkably similar to the period under Dr. Vishal Sikka, when INFOs revenues increased from 6.3% CC in 2QFY15 to 15% YoY CC in 4QFY16 and 12% in 1QFY17. EBIT margin during this period shrank 200bp and currency had depreciated by 11%. In both instances, however, we see revenue growth gaining priority over margins. In the earlier period, INFO saw its stock price gain 33%, while in the recent period, the uptick in the stock price was a robust 59%.

Infosys Ltd. reported strong growth in top line and healthy deal wins for the period of Q3FY19. Infosys posted revenue growth of 10.1% on YoY basis and 2.7% sequential growth in constant currency terms for the period of Q3FY19. Deal wins came in strong with TCV of $157 cr.

EBIT margin came below expectation at 22.6% down by 118 bps QoQ impacted by oneoffs, increased compensation & investments and lower utilisation. We have increased our revenue estimate for FY19/20, given beat in performance in Q3FY19, upgrade in revenue guidance, sustained investments in digital and strong deal wins. We build revenue CAGR of 13% over FY18-21E. However, due to miss in margin in Q3FY19 with continued investments and rupee appreciation, we tweak our EBIT margin estimate by 50/40bps for FY19E/20E. Hence, we maintain HOLD' rating on the stock with a revised rollover TP of Rs. 802...

OPM fell 280 basis points to 23.2% which saw OP fall 7% to Rs 4959 crore. Other income grew 2% to Rs 753 crore. After providing for depreciation (up 25% to Rs 580 crore), PBT fell 9% to Rs 5132 crore....

Closing In On Double-digit Growth: Is It The Cycle Or The CEO? Infosys hit double-digit YoY revenue growth in 3QFY19 in constant currency (CC) terms after a gap of 10 quarters. It also delivered large deal TCV of US$1.57bn in a historically lean quarter. YTDFY19 TCV is 2.1x on YoY basis. EBIT margin was a tad softer than even the cautious guidance that Infosys had given (unlike TCS), largely driven by a one-off. Based on a strong 3Q and order inflow, Infosys revised its FY19 revenue growth guidance to 8.5%-9% CC from 6%-8% earlier. It kept EBIT margin guidance constant at 22%-24%. All of the above (except the margin part) have been positive surprises for the market. However, sustainability of this robust growth in revenues and TCV is the...

Led by solid revenue growth in Q3FY19, we raise Infosys USD revenue growth Change in Estimates | Target | Reco assumptions to 7.8/9.3/9.2% for FY19/FY20/21E (vs 7.5/9.2/9.2% modeled earlier). Infosys would need to deliver 1.9% QoQ in cc in Q4FY19 to achieve...

Infosys (INFO) Q3FY19 result beat ours and consensus forecast as regards revenue growth metrics CC growth of 2.7% QoQ, large deal TCV of US$1.57 bn and upward revision of FY19 revenue growth guidance to 8.5%-9% in CC. However, EBIT margin decline of 120bps QoQ to 22.6% was a miss....

Industrial growth declined to 0.5% in Nov'18 from 8.4% in Oct'18. Manufacturing growth fell sharply to (-) 0.4% from 8.2% in Oct'18. Both consumer (durables and FMCG) and capital goods sectors reported a decline. While base effect explains a part of the decline, lower exports and domestic demand also contributed to the dip. We expect muted growth in the next few months owing to global and domestic headwinds. However, this slowdown is more cyclical than structural and growth is expected to pick up in H2FY20....

Infosys reported mixed results with revenues above our expectations and a margin miss. Constant currency (CC) revenues grew 2.7% QoQ (vs. our estimate of 2.2% QoQ) led by BFSI, energy & utilities and manufacturing. US$ revenues grew 2.3% QoQ to $2,987 million Reported EBIT margins fell 120 bps QoQ to 22.6%. However, adjusting for 40 bps one-time impact of Panaya and Skava, EBIT margins declined 70 bps QoQ to 23% led by a dip in utilisation, onsite mix (-80 bps), compensation (-30 bps), investments in sales (30 bps) and acquisition impact (-20 bps). This was partly offset by...

Maintain BUY with TP of Rs 800, 18x Dec-20E-EPS. Infosys (INFY) posted strong revenue performance, robust large deal bookings and increased its FY19E rev guidance. However, operating performance was soft impacted by accelerated hiring, lower utilisation (seasonality impact) and higher onsite-mix (large deal transition). Revenue came at USD 2,987mn, 2.7/10.1% QoQ/YoY in CC terms.

Infosys reported 2.7% qoq revenue growth in CC terms in Q3 (2.4% on an organic basis), ahead of our estimate of 1.5% CC growth, and raised the upper end of its 6-8% CC growth guidance (provided at the start of the year) by 50-100bps to 8.5-9.0% for FY19. Adjusted operating margins stood at 22.9%, down 80bps qoq (reported OPM down 110bps qoq), largely on account of attrition-led compensation increases (-30bps), drop in utilization...

11 January 2019 YoY CC five quarter ago. Investments, however, continued to take a toll, with the INFOs EBIT margin has shrank by 210bp over the last eight quarters, during which the INR has depreciated by ~6%. Adj. PAT grew 8% YoY to INR39.9b (1% beat) in 3QFY19. INFO announced (a) buyback of INR82.6b under the open market route at a maximum price of INR800/share and (b) special dividend of INR4/share, in line with its announcement of USD2b payout to shareholders. INFO won 14 large deals in the quarter with a TCV of USD1.57b, taking the 9MFY18 deal value to USD4.7b (+2.2x YoY). INFO raised its full-year revenue guidance to 8.5-9.0% QoQ CC, which implies a 4Q ask-rate of 0.3-1.

Strong deal wins lend confidence to growth trajectory Infosys is India's second largest IT company. It provides services across various verticals such as Financial Services (FS), Manufacturing (MFG), Energy & Utilities, Communication &...

Infosys Ltd Q2FY19 results Comment Revenue rose by 7.74% to Rs. 20609.0 Cr in Q2FY19 when compared to the previous quarter. Also, it rose by 17.32% when compared with Q2FY18.

Strongest TCV Ever, But At A Cost; We Like The Growth Focus ACCUMULATE Shrugging itself off from a turbulent 2017, Infosys recorded best ever large deal total contract value (TCV) in its history of US$2bn (previous highest ~US$1.2bn) in 2QFY19, against our expectation of US$1.5bn. 63% of the TCV is net new Infosys has been perennially plagued not only by its low TCV (compared to its size), but also by the fact that most of it was renewal, which did not help drive growth. A large part of this surprise has to do with: (1) The red-hot demand environment the best since the Global Financial Crisis of 2008-09. (2) Fairly aggressive bidding. The US$700mn Verizon deal is a case in point. Infosys is not a recognised...

Infosys's (INFO) Q2FY19 result was in-line with our forecast as regards headline numbers. While revenue growth of 4.2% QoQ in CC and TCV of US$2bn (highest till date) beat our forecast, EBIT margin of 23.7%, unchanged QoQ, was a miss. Digital revenue is now 31% of INFO's revenue and grew by 13.5%/33.5% QoQ/YoY in CC. INFO has maintained FY19 guidance. While we were forecasting it to maintain the revenue growth guidance, we were expected it to increase EBIT margin guidance. We factor FX rate of R70 vs. Rs68 earlier for H2FY19 and FY20. We increase our FY19/20E EPS by 1.6%/4.6%. We now forecast FY19/20 revenue growth in CC at...

Financial Services & Retail Power the Verticals, Digital Revenue Robust A major positive in 2QFY19 was impressive growth in Financial Services (+5.8% QoQ in CC terms) and Retail (+5.9%) verticals. Stable demand environment and waning client-specific issues augur well for these verticals, which contributed ~50% to Infosys' total revenue (49.1%). Notably,...

ICICI Securities Ltd | Retail Equity Research US$ revenues grew 3.2% QoQ to $2,921 million (above our estimate of 2.2%) mainly led by healthy growth in BFSI and retail. Constant currency (CC) revenues grew 4.2% QoQ vs. our estimate of 3% QoQ. Rupee revenues grew 7.7% QoQ to | 20,609 crore At 23.7%, EBIT margins were flat QoQ mainly led by higher compensation (-100 bps), subcontracting cost (-50 bps) offset by rupee depreciation (+80 bps) and pricing, onsite mix (+70 bps)...

Maintain BUY with TP of Rs 800, 18x Sep-20E-EPS Infosys (INFY) posted strong revenue and deal bookings, offset by soft operating performance and static guidance (conservative). Revenue came at USD 2,921mn, 4.2/8.1% QoQ/YoY in CC terms, ahead of TCS sequential performance. EBIT margin was flat at 23.7% with INR gains impact (+80bps QoQ) and pricing (+70bps), offset by higher variable pay and senior workforce wage increase (-100bps) and higher sub-contracting expense (-50bps). APAT at Rs 41.10bn was supported by lower ETR.