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S h i b u ’ s g e t t i n g I n f y ’ s a c t t o g e t h e r …
Infosys executed one of its controlled earnings call in recent history and
reported Q2FY12 numbers, which were ahead of our and consensus
estimates. Sequentially, US$ revenues grew 4.5% (4.1% estimate) while
rupee revenues grew 8.2% (6.5% estimate) helped in part by the
depreciating rupee. Raising of FY12E EPS guidance to ~| 143.02-145.26
vs. | 128.2-130.08 was a positive surprise (they had done this before,
refer Exhibit 1) while lowering of FY12E US$ revenue growth guidance to
17.1-19.1% (18-20% earlier) was in line with our expectation. We are
raising our FY12E estimates to accommodate the Q2FY12 beat and our
price target to | 2950 (| 2800 earlier) while maintaining our BUY rating.
ƒ Is the buffer in place for FY12E EPS guidance?
Concerns rose when Infosys raised the lower end of its FY12 EPS
guidance by 11.6% to | 143.02 vs. | 128.2 earlier to account for the
10% depreciation of rupee assumption in its guidance. However, we
would like to highlight that on July 11, 2008 (Q1FY09 earnings call),
Infosys had raised its FY09 EPS guidance by 7.6% vs. that given at
end of Q4FY08 led primarily by 7.6% depreciation of the rupee.
Note, during Q2FY09 earnings (October 10, 2009) Infosys
maintained its top end of FY09 EPS guidance despite 9.1%
depreciation of the rupee assumption in its guidance to | 46.97 vs. |
43.04 at the end of Q1FY09. The rationale could be the Lehman
bankruptcy filling on September 15. Finally, Infosys ended FY09 with
EPS of | 102.7 as CY08 IT budget spending remained fairly intact
V a l u a t i o n
We are raising our FY12E revenue/EPS estimates to | 33,851/| 139,
23%/16% YoY growth, respectively, while maintaining our FY13
estimates. We have valued Infosys at 20x (19x earlier) our FY13E EPS
estimate of | 147.9 and maintained our BUY rating with a 12 month price
target of | 2950
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
S h i b u ’ s g e t t i n g I n f y ’ s a c t t o g e t h e r …
Infosys executed one of its controlled earnings call in recent history and
reported Q2FY12 numbers, which were ahead of our and consensus
estimates. Sequentially, US$ revenues grew 4.5% (4.1% estimate) while
rupee revenues grew 8.2% (6.5% estimate) helped in part by the
depreciating rupee. Raising of FY12E EPS guidance to ~| 143.02-145.26
vs. | 128.2-130.08 was a positive surprise (they had done this before,
refer Exhibit 1) while lowering of FY12E US$ revenue growth guidance to
17.1-19.1% (18-20% earlier) was in line with our expectation. We are
raising our FY12E estimates to accommodate the Q2FY12 beat and our
price target to | 2950 (| 2800 earlier) while maintaining our BUY rating.
ƒ Is the buffer in place for FY12E EPS guidance?
Concerns rose when Infosys raised the lower end of its FY12 EPS
guidance by 11.6% to | 143.02 vs. | 128.2 earlier to account for the
10% depreciation of rupee assumption in its guidance. However, we
would like to highlight that on July 11, 2008 (Q1FY09 earnings call),
Infosys had raised its FY09 EPS guidance by 7.6% vs. that given at
end of Q4FY08 led primarily by 7.6% depreciation of the rupee.
Note, during Q2FY09 earnings (October 10, 2009) Infosys
maintained its top end of FY09 EPS guidance despite 9.1%
depreciation of the rupee assumption in its guidance to | 46.97 vs. |
43.04 at the end of Q1FY09. The rationale could be the Lehman
bankruptcy filling on September 15. Finally, Infosys ended FY09 with
EPS of | 102.7 as CY08 IT budget spending remained fairly intact
V a l u a t i o n
We are raising our FY12E revenue/EPS estimates to | 33,851/| 139,
23%/16% YoY growth, respectively, while maintaining our FY13
estimates. We have valued Infosys at 20x (19x earlier) our FY13E EPS
estimate of | 147.9 and maintained our BUY rating with a 12 month price
target of | 2950
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