Infosys Q1FY13: Another miss, expects further cut in estimates
- Results below expectation: Infosys’ revenue grew by 8.6% QoQ to Rs96.16bn for Q1FY13 (Guid.: Rs90.56bn, PLe: Rs96.11bn, Cons: Rs96.08bn) in Indian rupee term, whereas revenue in US$ term de-grew by 1.1% to US$1752m (@cc $1763m) (Guid.: $1,780m, PLe: $1,780m). The company reported an operating margin erosion of 190bps QoQ to 28% (PLe: 31.4%, Cons: 30.4%) despite currency tailwind of 9.8% QoQ. The company reported EPS of Rs40 (Guid: Rs36.89, PLe: Rs42.06, Cons: Rs42.43), a de-growth of 1.2% QoQ.
- Geography and segments – NA and Manufacturing stable, Europe and BFSI disappoints: Revenue for NA and Europe grew by 1.6% (@cc 1.7%) and -8.4% (@cc -7.2%) QoQ, respectively, whereas in terms of vertical, Maunfacturing and BFSI grew by 2.2% (@cc 3.1%) and -1.1% (@cc -0.4%) QoQ, respectively. Except Testing Services (5.3% QoQ) and IMS (5.3% QoQ), all service line declined.
- Pricing – pricing declined: The pricing declined by 3.7% QoQ (Onsite: -3.4%, Offshore: -3.8%). It added 51 new clients. Utilization excluding trainees further fell by 140bp to 71.6% due to weaker than expected growth.
Outlook - Lower than expectation of US$ revenue guidance, No guidance for Q2FY13: Infosys has revised their US$ revenue guidance downward by 3.7% due to cross currency movement and weaker demand. The new guidance in USD revenue growth is 5% for FY13 (PLe: 7-9%, Cons: 6-8%). Its rupee EPS guidance revised upward by 4% YoY to Rs166.5 (PLe: Rs164-168). The company has stopped giving quarterly guidance.
Stock Valuations and Recommendation- See pressure on stock in near terms:
Prabhudas Lilladher sees weakness in the stock price due to weak guidance in near term. They may revisit their estimates post conference call.
Click here to read the full report
Prabhudas Lilladher has a nationwide distribution network, consisting of branches, franchisees and associates, providing a comprehensive gamut of financial services in the Institutional and Retail domain. Their services includes Equity, derivatives; margin funding, mutual funds, PMS, IPOs and online trading.
For more information please write in to email@example.com
Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.
- Infosys: Margin upgrades likely, Revenue to stay put; buy
- Buy Infosys for a target of Rs4040
- Infosys: Accumulate between CMP and Rs3081
- Technical Stock Pick: Sell Infosys between CMP and Rs3260
- Infosys: Mr. Vishal Sikka appointed CEO, Mr. NRN to become Emertius; buy
Have a question?
Also On IndiaNotes.Com
- Technical Stock Pick: Sell HDIL between CMP and Rs87
- Federal Bank: Credit growth to resume, maintain buy