Views on Infosys Ltd 4QFY2017 Results: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research- IT, Angel Broking):

"For, 4QFY2017 the results were below expectations, on the sales front the company has posted revenue of US$2,569mn V/s expectations of US$2,589mn, with 0.7% QoQ growth. On the CC (constant Currency), the revenues have remained flat QoQ. The volume growth during the period came in at 1.2% QoQ. In Rupee terms, the company posted sales of INR 17,120 v/s expectations of INR 17,244cr, a dip of 0.9% QoQ. On the operating margins, the EBIT margin came in at 24.7% V/s 24.6%. The PAT came in at INR 3,603cr V/s INR 3,708cr a QoQ dip of 2.83%.

In terms of the geographies on CC terms, USA posted 1.2% QoQ growth; Europe posted a dip of 1.6% QoQ. India and ROW posted a dip of 6.9 and 1.3% QoQ. In terms of Industries, the company saw ECS post a QoQ growth of 2.8%, while FSI posted a QoQ growth of 0.5%. The verticals which posted dip were RCL, which dipped by 3.1 QoQ growth, while MFG & Hi Tech posted a flat QoQ growth.

On the operating matrix, the utilisation rate came in at 78.2% V/s 77.8% in 3QFY2017 (including trainees). The utilisation rate came in at 82.0% V/s 81.9% (excluding trainees). The attrition rate came in at 17.1% V/s 18.4% in 3QFY2017.

For FY2018, the company has given guidance of 6.5-8.5% CC growth, with EBIT margins expected to come in at 23-25%. While the topline guidance is marginally lower the EBIT margins built in the currency appreciation. Also the company has guided to give out to share holders around US$2bn, through dividend and buy backs. Also during the current year the company has increased its payout ratio to ~50%. These are good developments for shareholders.

While given the guidance we may look at the FY2018 numbers, we believe that the valuations are attractive for long term investors. Hence we maintain our BUY rating on the stock."

Shares of INFOSYS LTD. was last trading in BSE at Rs.931.4 as compared to the previous close of Rs. 968.8. The total number of shares traded during the day was 1552568 in over 46351 trades.

The stock hit an intraday high of Rs. 990.95 and intraday low of 927. The net turnover during the day was Rs. 1463891287.

Source : Equity Bulls

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