Infosys Ltd. share price target

EBIT margins beat our estimates, management retained EBIT margin guidance band at 21-23% for FY2020E Continued strong digital growth, up 38.4% y-o-y...

Infosys Limited is the second-largest Indian IT company that provides business consulting, information technology and outsourcing services. The Group's services include application development, product codevelopment, system implementation and system engineering, targeting...

Infosys Ltd. reported strong growth in top line and healthy deal wins for the period of Q1FY20. Infosys posted revenue growth of 10.6% on YoY basis and 2.3% sequential growth in constant currency terms for the period of Q1FY20.

As a positive surprise, INFO has increased its FY20 revenue guidance to 8.5%-10% YoY in CC from 7.5%-9.5%, we were expecting it at the end of Q2FY20. Large deal win TCV hit an all-time high of US$2.7 bn. Further, payout has been increased to 85% of FCF over a 5-year period from FY20 onwards vs. 70% earlier....

Infosys reported 2.8% sequential revenue growth in constant currency with Stater acquisition contributing 60 bps to it. This quarter growth was broad based and across verticals with communication and Energy & utilities segment leading in terms of growth trajectory. Going forward, retail, communication and energy & utilities are expected to drive growth while BFSI & manufacturing are expected to be under pressure (due to weakness in capital markets, European banks and softness in European auto). Retail segment is expected to witness acceleration mainly led by higher spending...

Other income rose 11% to Rs 736 crore. After providing for depreciation (up Latest Bookvalue (cons.) -Unit Curr. 28% to Rs 681 crore), PBT fell 2% to Rs 5167 crore. Provision for taxation jumped 13% to Rs 1365 crore after which PAT fell 7% to Rs 3802 crore. Minority...

Infosys reported organic CC growth of 2.2% QoQ excluding Stater which Change in Estimates | Target | Reco accounted to 60bps to CC revenue growth. Strong organic revenue growth was led by telecom & energy verticals. EBIT margins were tad better than our...

INFY's revenue growth has picked up from 6% YoY CC in 1QFY19 to 12.4% YoY in 1QFY20, supported by large deal momentum, growth in digital and acquisitions. But margins have eroded, both on absolute (-320bps YoY) and relative basis (370bps below TCS vs. 130bps a year ago). We don't expect a cure anytime soon. High cost of delivery (rising localisation and sub-contracting), spiking attrition and large deal aggression pose serious hurdles. Current valuations amply bake in our est. USD rev/EPS CAGR of 10/7% over FY19-22E. Increased payout (85% of FCF vs. 70%) and near-term growth momentum will support valuations. The regulatory arbitrage in buyback is now closed, making it as (in)efficient as dividend. Risks to our thesis include INR appreciation and broader macro deterioration. Hold INFY if you must, but only passively. We maintain NEUTRAL on Infosys post a mostly in-line 1QFY20. INFY upped its growth guidance on strong deal wins, but margin concerns persist. Our TP of Rs 770 is based on (a generous) 18x Jun-21E EPS.

Impressive deal wins; risks to operating margins ahead Infosys (INFO) reported a largely in-line Q1FY20 operating performance, with 2.8% QoQ CC revenue growth and 20.5% EBIT margins. At US$ 2.7bn, the company notched up its highest quarterly deal wins, which supported upbeat revenue guidance for FY20. Though strong deal wins and guidance lay the ground for healthy growth momentum, margin management could be a challenge given elevated attrition and tight staff cost control. We tweak FY20/...