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1QFY2012 Result Review
Infosys
For 1QFY2012, Infosys reported revenue of US$1,671mn, up 4.3% qoq, primarily on the
back of decent 4.0% qoq volume growth. The 4.0% qoq volume growth was mainly driven
by 6.8% qoq growth in onsite volumes; offshore volumes grew by 2.7% qoq. Pricing
remained stable during the quarter. The cross-currency movement benefited USD revenue
by 1.2% qoq. In INR terms, revenue came in at `7,485cr, registering 3.2% qoq growth.
The company’s EBITDA and EBIT margins declined by 298bp and 291bp qoq to 29.1%
and 26.1%, respectively, due to wage hikes given in 1QFY2012 (10–12% for offshore
employees and 2–3% for onsite employees) effective from April 1, 2011. Also, EBIT margin
got negatively impacted by 40bp qoq due to INR appreciation against USD. PAT stood at
`1,722cr, down 5.4% qoq.
The FY2012 USD revenue growth guidance was left unchanged at 18–20% yoy to
US$7.13bn–7.25bn. For 2QFY2012, Infosys has guided for 3.5–5.0% qoq growth in USD
revenue to US$1.730bn–1.755bn, which is lower than our expectations. EPS guidance for
FY2012 increased to US$2.88–2.92, 10.0–11.5% yoy growth vs. the previous guidance of
8–10% yoy growth. We recommend Accumulate rating on the stock with target price of
`3,200.
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