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Infosys Technologies (INFO)
OW: Infosys investor meetings - key highlights
While demand remains uncertain, the recent org-restructuring
should help Infosys gain market share in FY13
IT spending in Banking and Retail remains good; decisionmaking
has started to slow down in hi-tech and manufacturing
We remain OW on Infosys (TP INR3,000) and maintain our 15%
growth forecast for FY13
We hosted Infosys management to meet investors in London. Overall the discussions
revolved around 3Q guidance update, 2012 IT budgets, resulting FY13 growth outlook
and benefits of the recent corporate restructuring (Infosys 3.0).
Vertical markets demand update: IT demand strength has remained polarised from the
vertical market perspective. On the one end, Banking and Financial services market (BFS)
and Retail have remained strong for Infosys, but weakness has started to become visible in
other parts, such as Manufacturing. Mr Sudhir Chaturvedi, Head of Manufacturing in
Europe for Infosys, alluded to slowing velocity of deal closures in Manufacturing. While
the deal pipeline has remained healthy, clients are taking more time to close deals. There
are anecdotal evidences of clients asking to elongate the duration of the deals as well.
Strength in demand from the banking market is largely led by compliance and regulatory
work, which we believe should continue to grow considering the impending regulatory
deadlines in the US and UK, both in banking and insurance. Telecom is expected to be
stable and should show positive growth in FY13. New clients in the wireless space are
ramping up fine and no further decline in revenues from BT is expected by the company.
Overall FY13 and 3Q12 outlook: The company was upbeat on the long-term outsourcing
market outlook and the non-linear initiatives of Infosys; particularly Finnacle, digital
marketing platform, social commerce platform are getting strong traction. However, with the
uncertain macro-environment in the near term, Infosys has seen moderation in demand and
delay in decision-making (as mentioned earlier). We maintain our estimate of 15% growth
for company in FY13, but currently see modest upside potential. Management also clarified
recent media reports and confusion around the 3Q guidance. They expect 3Q top-line
growth to be in the range of 3.2% to 5.4% q-o-q. In our previous note as well "Analyst day
takeaways" on 7 November, we have stated that it’s unlikely the company will be able to
beat the higher end of the guidance in a seasonally weak quarter; in that regard, recent
management comments should not come as negative news for the market.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Infosys Technologies (INFO)
OW: Infosys investor meetings - key highlights
While demand remains uncertain, the recent org-restructuring
should help Infosys gain market share in FY13
IT spending in Banking and Retail remains good; decisionmaking
has started to slow down in hi-tech and manufacturing
We remain OW on Infosys (TP INR3,000) and maintain our 15%
growth forecast for FY13
We hosted Infosys management to meet investors in London. Overall the discussions
revolved around 3Q guidance update, 2012 IT budgets, resulting FY13 growth outlook
and benefits of the recent corporate restructuring (Infosys 3.0).
Vertical markets demand update: IT demand strength has remained polarised from the
vertical market perspective. On the one end, Banking and Financial services market (BFS)
and Retail have remained strong for Infosys, but weakness has started to become visible in
other parts, such as Manufacturing. Mr Sudhir Chaturvedi, Head of Manufacturing in
Europe for Infosys, alluded to slowing velocity of deal closures in Manufacturing. While
the deal pipeline has remained healthy, clients are taking more time to close deals. There
are anecdotal evidences of clients asking to elongate the duration of the deals as well.
Strength in demand from the banking market is largely led by compliance and regulatory
work, which we believe should continue to grow considering the impending regulatory
deadlines in the US and UK, both in banking and insurance. Telecom is expected to be
stable and should show positive growth in FY13. New clients in the wireless space are
ramping up fine and no further decline in revenues from BT is expected by the company.
Overall FY13 and 3Q12 outlook: The company was upbeat on the long-term outsourcing
market outlook and the non-linear initiatives of Infosys; particularly Finnacle, digital
marketing platform, social commerce platform are getting strong traction. However, with the
uncertain macro-environment in the near term, Infosys has seen moderation in demand and
delay in decision-making (as mentioned earlier). We maintain our estimate of 15% growth
for company in FY13, but currently see modest upside potential. Management also clarified
recent media reports and confusion around the 3Q guidance. They expect 3Q top-line
growth to be in the range of 3.2% to 5.4% q-o-q. In our previous note as well "Analyst day
takeaways" on 7 November, we have stated that it’s unlikely the company will be able to
beat the higher end of the guidance in a seasonally weak quarter; in that regard, recent
management comments should not come as negative news for the market.
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