INSUBCONTINENT EXCLUSIVE:
JM Financial has given a buy rating to Infosys with a revised target price of Rs 710 (Rs 730 earlier).
Infosys has projected an optimistic
outlook while acknowledging the near-term challenges and a soft FY20 exit ($7.4 per cent YoY, in constant currency (CC) excluding the $30
million revenue impact from COVID-19)
Both companies intend to leverage their scale to gain market share in the current environment
The brokerage believes that is feasible if one goes by the post-great financial crisis (2009) experience
An aggressive chase of volumes (through vendor consolidation and/or captive buy-outs) would likely involve atypical commercial structures
As such, the margin commentary was measured
Infosys did not specify a target margin band due to a low visibility on revenues, though it repeatedly highlighted the flexibility on
The share price moved down by -2.40 per cent from its previous close of Rs 653.30
The last traded price is Rs 637.6
Incorporated in 1981, Infosys has a market cap of Rs 278069.62 crore
Investment RationaleWorking capital management and cash conversion were steady in the fourth quarter of FY20
DSO (Days sales Outstanding), including unbilled, was down by 2days QoQ; OCF/EBITDA was 88 per cent vs
Thus, while the fourth quarter FY20 headline financials were weaker than expected, the reassuring commentary + a demonstrated ability for
strong cash generation should keep the investors engaged
The share currently trades at c.20 per cent PER discount to TCS; the brokerage says this could narrow with the converging revenue growth and
It has lowered FY21/FY22 EPS estimates by c.3 per cent/4 per cent to build a tougher near-term outlook vs
the brokerage's earlier expectations leading to a revised target price of Rs 710
FinancialsFor the quarter ended December 31, 2020, the company reported consolidated sales of Rs 23267 crore, up 0.76 per cent from last
quarter sales of Rs 23092.00 crore and up 8.02 per cent from last year's same quarter sales of Rs 21539.00 crore
The company reported net profit after tax of Rs 4335.00 crore in the latest quarter.