Infosys Ltd. share price target

Despite a higher variable payout (100bp impact), robust EBIT margin expansion (+150bp QoQ) was a key positive. Additionally, sub- optimal EBIT margin levels and headroom for margin expansion, led by back- ended productivity benefits, should translate into strong outperformance on EPS growth (v/s the sector). The EBIT margin improved 220bp YoY / 150bp QoQ despite higher variable travel and visa costs (+230bp), [2] favorable currency (+70bp), [3] reduction in other discretionary costs (+110bp), [4] operational impact low utilization, onsite mix (-150bp), and [5] variable pay (-100bp). The companys absolute and relative performance (v/s TCS and Wipro) during the quarter is indicative of some of the investments made in the previous years Notwithstanding the higher variable payouts, the company delivered robust margin expansion. The EBIT margin improved 220bp YoY / 150bp QoQ despite higher variable pay visa costs (+230bp), [2] favorable currency (+70bp), [3] reduction in other discretionary costs (+110bp), [4] operational impact low utilization, onsite mix (-150bp), and [5] variable pay (-100bp).

Infosys' (INFO) Q1FY21 revenue in US$ saw a 2.4% QoQ decline (Est. -2.0% in CC) much lower than our forecast of 5.7% QoQ decline. Further, EBIT margin improvement of 150bps QoQ to 22.7% was a big beat to our forecast. EPS of Rs10, -2.1%/+13.1% QoQ/YoY also beat our forecast. In Q1FY21 it has secured large deals with TCV of US$1.74 bn (net new wins being ~19%). Yesterday, it announced digital transformation deal with Vangaurd which is its largest ever deal. In a big surprise, INFO has reinstated its FY21 guidance - revenue growth of 0% to 2% YoY in CC and EBIT margin of 21%-23%....

We recommend a BUY on Infosys with a Target Price of Rs 845, an upside of ~8% from CMP of Rs. 783 and Stop Loss Rs 750.

Valuation Maintain Buy with a revised PT of Rs. 920: We have revised our earnings estimates upwards for FY2021E/FY2022E, factoring in strong Q1FY2021 results and impressive annual guidance on both revenue and margin for FY2021E. We believe Infosys is well positioned to deliver strong growth in FY2022E because of pent-up demand, strong digital capabilities, and market share gains. At the CMP, the stock is trading at 21x/19x its FY2021E/FY2022E earnings estimates. Infosys is one of the industry leaders with robust execution capabilities and strong balance sheet (cash balance of...

In the last three months, BSE IT index (+31.4%) has performed largely in-line with BSE SENSEX (30.6%). There have been near-term headwinds on growth due to the impact of the Covid-19 pandemic. However, the sector's track record of dealing with headwinds, strong FCF profile, payouts (dividend/buyback) and corporate governance has augured well with robust FII flows and performance of broader markets. Q1FY21 has been another quarter of currency volatility cross-currency movement (negative for reported US$ revenue growth) and INR depreciation (positive on EBIT margin). However, this has been overshadowed by QoQ decline in revenue (in CC) and...

2019. Just a marginal growth in sales was largely on account of flat growth in both Financial Infosys for the quarter ended Mar 2020 registered a consolidated sales of Rs 23267 crore, a Services & Communication, two of three large business verticals of the company in-terms of contribution to topline as well as lower revenue reported by both manufacturing and life sciences. Revenue from financial services segment was flat (up 0%) at Rs 7282 crore (or 31.3%...

Maintain BUY with TP of Rs 680, at 16x FY22E EPS. Infosys (INFY) delivered rev/margin below estimates in 4Q. While near-term performance will be marred by demand dent across verticals, subsequent recovery will be supported by (1) Strong growth in digital (42% of rev), (2) Resilience in large deal wins (bookings tracking well), (3) Market-share gains from vendor consolidation, and (4) Operational prudence & favourable onsite supply metrics.

Infosys' (INFO) Q4FY20 revenue in CC saw a 0.8% QoQ decline vs. our forecast of a 0.3% growth. EBIT declined by 75bps QoQ to 21.2% vs. our forecast of a 30bps QoQ decline. EPS of Rs10.2, -3.1%/+8.7% QoQ/YoY was in-line with our forecast aided by lower ETR. In Q4FY20 it has secured large deals with TCV of US$1.6 bn (net new wins being ~56%) taking the FY20 TCV to US$9 bn. Given the uncertainty over the impact of Covid-19 pandemic INFO has suspended giving annual guidance, in-line with our expectation. We largely maintain our forecast of revenue (US$) and EPS CAGR of 4.4%/4% over FY20-22E. We maintain our TP of Rs678...

Infosys in line with its IT peers has withdrawn its revenue guidance for FY21E due to uncertainty led by Covid-19. The company in line with other peers expects near term revenues to be under pressure due to demand and supply related challenges. Slower client decision making, delay in projects, pricing pressure and lower discretionary spend are expected to impact near term performance. However, we expect the company to see improved revenue trajectory from H2FY21E. In terms of long term drivers, we expect acceleration in digital technologies, the company's ability to win large deals,...

Infosys Ltd revenue stood at Rs. 23,267 crs up 8% YoY and 0.8% QoQ. Operating profit showed a growth of 6.7% YoY at Rs. 4,927 crs, while operating margin declined by 80 bps at 21.2% (vs. 21.9% in Q3FY20) due to lower utilization & increase in H1 B visas fees