Infosys Ltd. | Q3FY15 Results Update | In-line Performance; $-Revenue Guidance Maintained |Upward Revision in TP to Rs. 2,377| Maintain HOLD ::IndiaNivesh,

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In-line Performance; $-Revenue Guidance Maintained |Upward
Revision in TP to Rs. 2,377| Maintain HOLD
Q3FY15 Result Highlights
 Infosys Q3FY15 result was largely in-line with INSPL estimates on all fronts.
Higher volume growth (+4.2% Q/Q) and slight uptick in EBIT margin (63 bps
Q/Q) remains the positive surprise for the street. The improvement on EBIT
front was primarily on back of higher utilization level and changes in
depreciation policy. The company maintains its earlier FY15 $-revenue
growth guidance range of 7-9% [to $8,826 mn to $8,991 mn]. The revenue
guidance implies 2.5% to 11.9% Q/Q $-revenue growth in Q4FY15. FY15,
rupee revenue guidance went up to 7.0% - 9.0% (v/s 6.7% - 8.7% y/y previous)
on account of change in INR v/s USD realization estimate from INR/
USD=61.00 to INR/USD=62.00. During the quarter, Infosys won three large
deals. The management sounded positive on overall deal pipeline. Key
segment like IMS and SMAC are likely to see good traction going-ahead.
 The uptick in Infosys stock price even after in-line Q3FY15 result
announcements illustrates that confidence in coming back from investors.
However, the confidence is based on the expectation that Infosys will reach
near the industry average $-revenue growth in FY16E. The $-revenue growth
estimates in FY16E is ~13.0% Y/Y, according to Bloomberg estimates. Any
deviation in FY16E management guidance (v/s street) would lead to correction
in the stock price. The near-term catalyst to the stock price could be change
in MSCI Index weight from ~10.76% to ~12.00% due to decline in promoter’s
stake by ~2.84% (to 13.08%) in December quarter leading to increased free
float.
 We see Infosys as long-term winner and maintain our FY15E EPS of Rs.112.
We remain confident of Infosys matching its peer revenue growth over longterm.
The management’s initiatives to focus on three areas: (1) accelerate
revenue growth, (2) upgrade delivery models, and (3) cost optimization should
augur well on the company’s future performance.
 We maintain HOLD with upward revision in target price of Rs.2,377 on stock

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http://www.indianivesh.in/Admin/Upload/635567370103437500_Infosys_Q3FY15%20Result%20Update.pdf