CMP: Rs1709 |
Target Price: Rs1910
■ Infosys' Q2FY22 operating performance was ahead of expectations due to a margin beat. Revenues grew 5.7% QoQ (6.3% CC) to USD4bn, in line with estimates. Operating efficiencies and SG&A leverage restricted the EBITM decline to 10bps QoQ to 23.6%.
■ Infosys raised its FY22 revenue growth guidance to 16.5-17.5% CC (earlier 14-16%), implying a 1.5-2.5% CQGR over Q3-Q4, on the back of broad-based demand, solid deal intake and healthy deal pipeline. The company retained its EBITM guidance at 22-24%.
■ Large deal intake was healthy at USD2.2bn in Q2FY22 (37% new), with 22 large deals signed during the quarter. The deal pipeline remains healthy, with a good mix of new and renewal deals offering good revenue visibility.
■ We increase earnings estimates by 0.4%/0.6%/0.4% for FY22/FY23/FY24, factoring in Q2 performance. We maintain Buy with a TP of Rs1,910 at 28x Sep'23E EPS, considering strong earnings momentum and robust demand environment.