汇丰银行-公司研究-infosys limited：buy：a welcome beat-20170714-hsbc

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1、14July2017InfosysLimited(INFOIN)EQUITIESITSERVICESBuy:AwelcomebeatIndia1Q18revenuesandmarginsbeatexpectations.FY18MAINTAINBUYguidanceretainedTARGETPRICE(INR)PREVIOUSTARGET(INR)Pick-upinbankingspendremainsthekeyupsidetriggerfor1150.001150.00earningsandstockover1-2yearsSHAREPRICE(INR)UPSIDE/

2、DOWNSIDEWeremainBuywithTPofINR1,150.Capitalallocation977.05+17.7%(asof13Jul2017)decisioniskeynear-termstocktriggerMARKETDATAMarketcap(INRm)2,244,230Freefloat71%Infosysbeatsbothrevenueandmarginestimatesin1Q18.Admittedly,inabsoluteterms,Marketcap(USDm)34,798BBGINFOIN3mADTV(USDm)54RICINFY.BOgrowth

3、of~2.7%q/qwasn’tgreatforaseasonallystrong1Q,butstillit’sbetterthanTCS1Qandstreetexpectations.Infact,1QisactuallyanimprovementforInfosyscomparedFINANCIALSANDRATIOS(INR)Yearto03/2017a03/2018e03/2019e03/2020etoitsrecentquarterlytrends(1Q18y/yccgrowthwasactuallyanaccelerationpost7-8HSBCEPS62.962.068

4、.174.2quartersofdecline–chart1).Also,marginperformancehassurprisedpositivelyforHSBCEPS(prev)63.162.668.374.5Change(%)-0.3-1.0-0.3-0.4InfosysasthecompanyhasperformedinlinewithTCS(forthepastfewquartersnow)ConsensusEPS62.863.769.774.8andstayedwithinitsguidancerangeof23-25%(despitethefactInfosyshasd

5、elayedPE(x)15.515.714.313.2Dividendyield(%)2.63.23.63.9wageinflationthisperformanceisnoteworthy,particularlyinlightoftheTCS’sbellwetherEV/EBITDA(x)10.09.78.87.8positioningforbestcostmanagementinthesectorandInfosys’sperceptionofaggressiveROE(%)22.019.720.020.2go-to-market).WeremainBuyasweseeInfos

6、ysbestpositionedtogainfromapick-up52-WEEKPRICE(INR)inspendintheUS,whilevaluationsremainundemanding(refertoourupgradenotefordetailson8June,IndianITServices:Calibratedoptimism).1300.001085.001Q18highlights:Infosysreported1Q18revenuesofUSD2651m,up3.2%q-o-qin870.00USDterms(versusconsensusof2.7%q-o-q

7、)andup2.7%q-o-qinconstant07/1601/1707/17Targetprice:1150.00currencyterms(vsconsensusof2.3%).Iny/yccorganicterms,revenuesgrew6.3%,High:1176.25Low:911.10Current:977.05whichisnowrecoveringpostmultiplequartersofsharpdeceleration