The second quarter earnings were above our estimates on revenue and EBITDA front. However, the net profit was marginally down due to one time charge of Rs 219 crore for provision related matters. The substantial increase in rupee revenue growth guidance was primarily due to change in depreciation of the Indian rupee against the US dollar from Rs 59.01 to Rs 62.01, IndiaNivesh Securities said in a note.
"At current market price of Rs 3,297, the stock is trading at 18.4 times FY14E and 15.2 times FY15E EPS estimate. However, valuations will look more attractive after 5% rise in earnings. Further, the gap between TCS and Infosys should narrow going forward after its delivers consistent and in-line industry performance. We revise our target price upward to Rs 3,630 and continue to maintain 'BUY' on the stock." said Daljeet Kohli-Head of Research, IndiaNivesh Securities Pvt Ltd.
The guidance for FY14 implies negative 1% CQGR growth for remaining two quarters at higher end - still builds enough caution despite strong quarter and improving demand outlook, IDFC Securities said in a note.
"We expect the stock to trade up and settle in Rs 3,200-3,500 till next set of good news comes in. We expect the stock to move sideways after today's initial upmove. Maintain 'Outperformer' rating on Infosys," says Hitesh Desai, Director, Equity Research at IDFC Securities.
Infosys' second quarter dollar revenu growth of 3.8% q-on-q at $2066 was led by volume growth of 2.6% q-o-q and price realisation gain of 1.6% surprised positively. However, flattish EBIT margin at 23.6% was due to higher sales & support staf costs and trainee costs, Motilal Oswal Securites said in note.
"Infosys US dollar revenue growth guidance of 9-10% year-on-year, was marginal short of our expectation. Our current estimate of dollar revenue growth for FY14 is 11% and EPS estimate is Rs 186.5. We maintain 'BUY' on the stock," said Rikesh Parikh, VP, Motilal Oswal Securities.
