MOSL: INFOSYS (Buy)-Making a case of valuation convergence
Infosys: Making a case of valuation convergence
(INFO IN, Mkt Cap USD46.2b, CMP INR727, TP INR840, 16% Upside, Buy)
1Q marginally ahead of expectations; performance broad-based
- INFO has started FY20 on a strong note, with constant currency (CC) revenue growth of 12.4% YoY (our estimate: 11.8%), an EBIT margin of 20.5% (down 320bp YoY, 40bp beat) and PAT growth of 5% YoY (our estimate: +1.1%) to INR38b.
- Revenue growth was broad-based, with five of its verticals (incl. core segments of Financial Services, Communications, Energy/Utilities/Resources, Manufacturing and Hi-tech) delivering double-digit YoY CC growth.
Raises revenue guidance; increases payout ratio
- INFO raised the lower end/upper end of its full-year revenue guidance by 100bp/50bp, taking the full-year revenue growth guidance to 8.5%-10% CC. It is uncharacteristic of INFO to revisit its guidance for the better as early as in 1Q. We believe that this reflects healthy visibility - at least for the near term, which should help it deliver double-digit growth for the fiscal.
- EBIT margin guidance band was maintained at 21-23% (100bp lower YoY).
- INFO revised its capital allocation policy - it will now return to shareholders 85% of cumulative FCF over a five-year period (up from current 70%).
Infosys is a global technology services company based in India. Co. provides business consulting, technology, engineering and outsourcing services. Co.'s end-to-end business solutions include: Consulting and Systems Integration - consulting, enterprise solutions, systems integration and advanced technologies; Business IT Services - application development and maintenance, independent validation services, infrastructure management, engineering services comprising product engineering and life cycle solutions and business process management; and Products, business platforms and solutions, including Finacle™, which addresses core banking, mobile banking and e-banking needs of banks worldwide.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.