Infosys reported Q3FY12 results touch lower than our/consensus expectation in a challenging quarter. However, the company lowered guidance for FY12 US$ revenue below our/consensus estimates. We see the result as weaker than consensus expectation. We see near term pressure on the stock price due to this.
The company reported an operating margin expansion of 301bps quarter-on-quarter to 31.2% due to currency tailwind of 11% q-o-q. EPS stood at Rs 41.51 (Guidance: Rs 38.86, Our estimates: Rs 39.37, Consensus: Rs 39.62).
Europe and Manufacturing shines, North America (NA) and Retail disappoints: Revenue for NA and Europe grew by 0.9% and 14% q-o-q, respectively, whereas in terms of vertical, manufacturing and retails grew by 4.5% and 0.8% q-o-q, respectively.
Pricing remained muted in-line with expectation: The pricing declined marginally by 0.1% q-o-q (Onsite: 1.4%, Offshore: -0.6%). It added 49 new clients.
Outlook
Infosys has revised its USD revenue growth guidance downward for FY12 to 16.4% y-o-y growth. It has revised its Rupee EPS guidance by 2.1% to Rs 147.13, a growth of 23.1% y-o-y. For Q4FY12, Infosys guided for 0.1% QoQ revenue growth to $1,808 mn and EPS of Rs 42.12.
We see pressure on stock in the near-term due to weak guidance.
