link), w" /> link), w" />
Amazon Great Indian Festival 2020 - Electronics
Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Amazon Great Indian Festival 2020 - Electronics

| More

Infosys - Stellar execution in both revenue & margin continues - ICICI Securities

Posted On: 2020-10-15 04:03:27

As enunciated in our sector note (link), we believe, in addition to industry-leading revenue growth (within large caps), our thesis around Infosys is also anchored around strong headroom for margin expansion from FY20 levels. Company has commendably been able to demonstrate the same in H1FY21 by delivering margin expansion of ~300bps to 24.1%. Infosys upgraded its guidance for FY21 revenues (by 2-3% in FY21E CC growth) and margin (23-24% in FY21E). Backed by its strong deal win momentum (large deal TCV win at US$3.1bn including Vanguard), we expect Infosys to lead the tier-I IT segment on organic revenue growth (FY20-FY23E sales CAGR: ~8.4%). Over FY18-FY20, EBIT margins contracted ~300bps to 21.3% led by: 1) planned catch-up in investments, 2) attrition interventions, and 3) large deal ramp-ups. As these investments normalise and back-ended productivity benefits kick in, we expect EBIT margins to bounce back by FY22E. Company also had a healthy cash conversion with FCF/NI at ~103% in Q2FY21. Maintain BUY with a revised DCF-based target price of Rs1,400.

- Strong beat in both revenue and margin: Infosys reported a stellar quarter in light of the current environment with a QoQ revenue growth of 4% in CC terms and margin of 24.5%. Growth in Q2FY21 was led by Financial Services (7.8%, QoQ US$). Retail (10.6%), Hitech (11%) and Lifescience segments (7.7%). Margin expanded by 270bps sequentially to 25.4%, with accretion primarily coming from increase in RPP (100bps), increased utilisation (up by 80bps), and improvement in offshore mix (80bps). Company has decided to provide hikes and promotions to employees from 1st Jan'21 with a one-time incentive payment to junior employees.

- Deal wins remain strong, especially in context of the tough environment. Large deal TCV was US$3.1bn in Q2FY21 including Vanguard, with new deals accounting for 84% of total deals in Q2FY21. The company signed 16 large deals in Q2FY21 with 11 from Americas and four from Europe.

- Revenue guidance and margin guidance upgrade: Infosys upgraded its revenue growth guidance to 2-3% in CC terms from 0-2% previously on the back of ramp-up in large deals and healthy outlook on the pipeline. Further, the company also increased its margin guidance to 23-24% from 21-23% earlier, aided by cost-saving measures (rationalisation of discretionary spend, savings in employee cost, pyramid optimisation, etc). However, as Infosys starts with its hike and promotion cycle, parts of these temporary margin benefits should go away in the coming quarters.

- Maintain BUY. Solid supply side execution (99% employees working from home; timely deal ramp-ups through remote onboarding even of rebadged employees, etc.), strong balance sheet (US$4.5bn net cash) and robust capabilities in digital (47.3% of revenues), up 25.4% YoY in CC terms in Q2) should ensure that Infosys gains market share through vendor consolidation and transformative cost takeout initiatives for clients (as evidenced in Vanguard deal win). Consistent growth outperformance (vs TCS) over the previous six quarters went under-appreciated till recently, given the unfortunate controversy around whistle-blower issue. However, as investor interest is back to the fundamentals and given our expectation of continued outperformance, we foresee a compelling case for multiple catch-up (currently at ~20% discount vs the historical average of 14.5%, vis-a-vis TCS). Maintain BUY with a revised target price of Rs1,400.

Shares of INFOSYS LTD. was last trading in BSE at Rs.1108 as compared to the previous close of Rs. 1136.1. The total number of shares traded during the day was 2663595 in over 41182 trades.

The stock hit an intraday high of Rs. 1185 and intraday low of 1093. The net turnover during the day was Rs. 3032792678.

Source: Equity Bulls

Click here to send ur comments or to

Amazon Great Indian Festival 2020 - Mobiles

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Nestle India - 3QCY20 results - First Cut - YES SECURITIES

Crude Oil - Oct 23, 2020 - Reliance Securities

Maintain BUY on Ambuja Cements - Stellar show yet again; dividend bonanza announced - HDFC Securities

ADD on Bajaj Auto - Margin beat - HDFC Securities

Maintain REDUCE on Asian Paints - Standing tall - HDFC Securities

SBI cards - Q2FY21 - Angel Broking

Biocon - Q2FY21 - Angel Broking

Mphasis - Q2FY21 numbers - Angel Broking

L&T Finance Holdings - Q2FY21 - Angel Broking

HDFC AMC - Q2FY21 - Angel Broking

Bajaj Finserv (Not rated) - Q2 FY21 Conference Call Takeaways - YES Securities

Syngene International - Q2FY21 conference call takeaways - YES Securities

SBI Cards Q2FY21 Call Highlights - YES Securities

Sterlite Technologies (Q2FY21) - Conference call takeaways - YES Securities

Asian Paints Ltd - Q2FY21 Result Update - YES Securities

HDFC AMC - Q2FY21 Result Update - YES Securities

Alembic Pharma - Solid delivery continues; Top pick BUY TP Rs 1,180 - YES Securities

Sterlite Technologies - Q2FY21 First Cut - ICICI Securities

Tata Metaliks - Q2FY21 Company Update - ICICI Securities

Bajaj Auto - Q2FY21 First Cut - ICICI Securities

Bajaj Finserv - Q2FY21 Result Update - ICICI Securities

Asian Paints - Q2FY21 First Cut - ICICI Securities

Bharti Infratel - Q2FY21 - Angel Broking

Asian Paints - Q2FY21 - Angel Broking

Bajaj Auto - Q2FY21 numbers - Angel Broking

Maintain ADD on Bajaj Finance - Prudent provisioning hits profits - HDFC Securities

FDA warning letter to Aurobindo Pharma - Angel Broking

Chennai Petroleum - Q2FY221 Results - Angel Broking

Maintain ADD on Colgate Palmolive - Healthy domestic recovery; robust margin show - HDFC Securities

Maintain BUY on UltraTech Cement - Well-rounded performance - HDFC Securities

DB Corp - Q2FY21 Result Update - ICICI Securities

Bajaj Finance - Q2FY21 Result Update - ICICI Securities

Colgate-Palmolive (India) - Q2FY21 Result Update - ICICI Securities

UltraTech Cement - Q2FY21 Result Update - ICICI Securities

Larsen & Toubro Infotech - Q2FY21 Result Update - ICICI Securities

Sagar Cements - Q2FY21 First Cut - ICICI Securities

JK Tyre & Industries - Q2FY21 First Cut - ICICI Securities

Bajaj Finserv - Q2FY21 First Cut - ICICI Securities

UltraTech Q2FY21 - Retain ADD with TP of Rs 5,104 - YES Securities

Bajaj Finance - Q2FY21 - Result Update - YES Securities

Sagar Cements Q2FY21 - EBITDA at lifetime high; maintain TP of Rs 745 - YES Securities

JK Tyre - Q2FY2021 numbers - Angel Broking

Sagar Cements - Q2FY21 Results - Angel Broking

Bajaj Finance - Q2FY21 Results - Angel Broking

Bajaj Finance Q2FY21 - Retain ADD - 12m PT of Rs. 3,600 - YES SECURITIES

PNC Infratech - JV emerges L1 bidder - Angel Broking

GMM Pfaudler - Q2FY21 Results - Angel Broking

Rane Madras - Q2FY21 numbers - Angel Broking

Colgate-Palmolive - Q2FY21 Result - Angel Broking

Quant Pick - Tata Steel - ICICI Securities

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019