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Key takeaways from our interaction with Basab Pradhan(Sr. VP Head of Global Sales, Marketing and Alliances Member of Executive Council)and Sandeep Mahindroo(Principal Investor Relations):
No material change in macro-environmentwith long decision-making cycle for large deals.However, there is uptick in Request For Proposals (RFPs)and deal pipeline is better YoY
Continental Europe(13% of revenue),Australia(over 5% of revenue) among geographies andInfrastructure Management Services(IMS, 7% of revenue) among offeringsgathering momentum
Large deal wins, client mining(focus on 45 Star Accounts with USD 100 mn revenue potential, Q3FY13: 12) andbroadening of client base(~160 clients signed in last 2 years) remainkey growth strategies
CY13 budgets finalized on time, clarity on allocations awaited:CY13 budgets were mixed BFSI (down) and Manufacturing/ Retail (flat with positive bias).Manufacturing and Retail vertical has seen some pockets of discretionary spend
Outlook and valuation:Initiatives taken by Infosys over past few quarters to improve volumes continue to bear fruits (with 8 large deals signed in Q3). Hence we expect Infosys to deliver a much better growth in FY14E vs. FY13. Rise in discretionary spend to drive earnings/ multiple upgrades.
Maintain BUYwith target price of Rs 3,602 (16x FY15E EPS of Rs 225) which implies 25% upside fromCMP of Rs 2,877.The stock trades at 15x FY14E EPS of Rs 196 and 13x FY15E EPS of Rs 225.
Our estimates are based on INR/USD of Rs 56.5 for FY14E and Rs 58.5 for FY15E.
India Infoline News Service / 08:59, Sep 15, 2014
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