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Dolat Capital
Infosys (Accumulate)
CMP: ₹3,325.80
Target: ₹3,875
We believe the strong volume growth (2.9 per cent q-o-q), better outlook (commentary and deal TCV of $700 million), improved trajectory (management has indicated better H2 to be better than H1). We have broadly maintained our estimates with a revenue/earnings CAGR of 11 per cent/14 per cent over FY14-16E but believe the stock has re-rating potential given the declining growth differential, improved profitability and widened discount to TCS. Infy has maintained its annual dollar revenue guidance of 7-9 per cent CC growth for FY15 despite strong volume growth if 2.9 per cent during the quarter. Though stock has been underperforming the peers owing to past KMP exits/ earning warning in last quarter, we believe the stock should do better than the earnings growth due to likely improved sentiment and confidence restoration post joining of an external CEO — Vishal Sikka.
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