Ahead of the announcement of Q2 results, Infosys share price jumped 4.38 per cent in the early trade on Monday, but wiped out all the initial gains after the results were revealed and fell more than 5 per cent intraday on BSE. Infosys share price reacted negatively after the company cut the full year revenue growth guidance in dollar terms. However, according to market experts, the company has posted better-than-expected Q2 earnings numbers.
Infosys share price opened at Rs 1,202.70, touched a high/low of Rs 1,219 and Rs 1,108.90 respectively in trade so far. The scrip closed 3.88 per cent down at Rs 1,122.50.
According to Angel Broking, Infosys posted a 6 per cent sequential growth in US dollar revenue to $2,392 mn v/s $2,339 mn expected. In constant currency (CC) terms, the company posted a 6.9 per cent quarter-on-quarter (qoq) growth. The volume growth during the quarter came in at 3.7 per cent qoq. In rupee terms, revenues came in at Rs 15,635 crore V/s Rs 15,204 crore expected, up 8.9 per cent qoq. EBITDA margin came in 27.8 per cent V/s 27.6 per cent expected, an expansion of 165 basis points qoq. The EBIT came in at 25.5 per cent, just in line with expectations, expansion of 152 basis points. Consequently, net profit came in at Rs 3,399 crore V/s Rs 3,345 crore expected, a rise of 12.2 per cent qoq.
In terms of geography, USA grew by 6.2 per cent qoq CC, Europe grew by 8.3 per cent qoq CC, India grew by 12.1 per cent qoq CC and rest of the world grew by 7.1 per cent qoq CC. In terms of domain, the FSI (Banking & Financial Services) grew by 6.4 per cent qoq CC, manufacturing grew by 5.8 per cent qoq CC, retail and life sciences grew by 8.2 per cent qoq CC and ECS ( Energy, Utilities, Communication and Services) grew by 7.8 per cent qoq CC.
On guidance for 2015-16, on CC terms, Infosys has retained it unchanged at 10-12 per cent, but dollar guidance has been revised downwards to 6.4-8.4 per cent against 7.2-9.2 per cent earlier.
Sarabjit Kour Nangra, VP Research, IT, Angel Broking, said, “The revision in the US$, is mainly on the outlook of the company on the currency front. The company has also mentioned that it expects the second half of 2015-16 weaker than first half, and also that it is witnessing headwinds in some client accounts. We maintain our ‘Accumulate’ rating on the stock with a target price of Rs 1,306.”
Nithin Kamath, Founder and CEO, Zerodha, said, “Infosys Q2 results are quite impressive, slashing the full year dollar revenue guidance is reflection of management’s realistic market expectations. The current dip in the stock price is perhaps an overreaction to the cut in revenue guidance and profit booking to a certain extent. Investors should stay put in the stock, if not for accumulating more on every dip.”
According to a research note by Prabhudas Lilladher, Infosys Q2FY16 results are significantly ahead of consensus expectation. The management has however lowered its US$ guidance to 6.4 per cent-8.4 per cent (was 7.2%-9.2%) factoring in the cross currency impact. Management has retained it’s constant currency revenue guidance for FY16 at 10-12 per cent. Guidance implies 2 per cent QoQ decline to flat revenues over 3Q-4QFY16, which the brokerage house believes is extremely conservative. Prabhudas Lilladher expects the stock price to recover going forward.
