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Infosys strongly focuses on consulting and package implementation services (~25%
of revenue). Globally, license sales for SAP and Oracle services are surging, leading
to higher implementation opportunities for offshore vendors such as Infosys. Further,
key IT spend-thrift verticals such as BFSI (35.4%), manufacturing (20.3%) and retail
and CPG (16%) would continue to be the primary growth drivers for the company.
We expect Infosys to record a 21% CAGR in USD revenue over FY2011-13E, with
CAGR in INR revenue, EBITDA and PAT at 19.1%, 15.3% and 15.7%, respectively.
The stock has corrected significantly YTD2011 just on concerns of management
restructuring, which are unwarranted given the company's strong domain focus
with superior clientele, robust business model with the highest margin in the Indian
IT industry and healthy balance sheet with cash of US$3.9bn (1QFY2012). Currently,
the stock is trading at cheap valuations of just 14.2x FY2013E EPS of `159.9 i.e.,
only at ~17% premium to BSE Sensex vs. its five and two-year historical premiums
of 20% and 27%, respectively. We value the company at 20x FY2013 EPS i.e., at
`3,200 and recommend it as one of our top picks with a Buy rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Infosys strongly focuses on consulting and package implementation services (~25%
of revenue). Globally, license sales for SAP and Oracle services are surging, leading
to higher implementation opportunities for offshore vendors such as Infosys. Further,
key IT spend-thrift verticals such as BFSI (35.4%), manufacturing (20.3%) and retail
and CPG (16%) would continue to be the primary growth drivers for the company.
We expect Infosys to record a 21% CAGR in USD revenue over FY2011-13E, with
CAGR in INR revenue, EBITDA and PAT at 19.1%, 15.3% and 15.7%, respectively.
The stock has corrected significantly YTD2011 just on concerns of management
restructuring, which are unwarranted given the company's strong domain focus
with superior clientele, robust business model with the highest margin in the Indian
IT industry and healthy balance sheet with cash of US$3.9bn (1QFY2012). Currently,
the stock is trading at cheap valuations of just 14.2x FY2013E EPS of `159.9 i.e.,
only at ~17% premium to BSE Sensex vs. its five and two-year historical premiums
of 20% and 27%, respectively. We value the company at 20x FY2013 EPS i.e., at
`3,200 and recommend it as one of our top picks with a Buy rating.
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