Friday, April 15, 2011

Infosys 4 Q11 Results 15 April 2011

Infosys is set to report 4Q11 results today. While revenue growth is expected to be
seasonally weaker compared to the previous quarter, all eyes will be on guidance for FY12.
We expect Infosys to guide to 18-20% US dollar revenue growth and FY12 EPS at Rs134-
138. Infosys remains our top pick in our Indian IT coverage universe.
We believe seasonality could weigh on 4Q11 revenue growth  
Most sector large caps posted robust qoq US dollar revenue growth in 2Q11 and 3Q11.
However, we believe this dipped in 4Q11 on the back of a seasonally weak trend in volume
growth. For Infosys, we forecast 3.4% revenue growth with 30-40bp cross-currency tailwind.
We expect EBITDA margins to improve by 26bp, largely due to currency. We forecast PAT at
Rs18.6bn, representing 4.3% qoq growth. 
We expect Infosys to take a confident stance on FY12 US dollar revenue growth 
We expect Infosys to guide for 18-20% US dollar revenue growth for FY12 (vs 16-18%
guidance for FY11 announced in April 2010), given increased certainty on clients’ CY11 IT
budgets. For 1Q12, Infosys’s upper-end guidance is likely to reflect 4-5% qoq growth in US
dollar revenues. Despite high headroom to manage margin pressure, we expect Infosys to
guide conservatively on FY12 EPS at Rs134-138 (ie 12-15% growth), factoring in +2% rupee
appreciation, investment in non-linear delivery and ramp-up in local staff at onsite locations. 
Infosys remains our top pick, besides Buys on TCS and HCL Tech  
We do not rule out Infosys announcing FY12 revenue guidance exceeding our expectation,
in which case we think the pre-results rally could continue. Infosys remains our top pick given
its better earnings visibility vs its peers. ... CLICK HERE TO VIEW MORE 

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