vengabeats
Nilesh Nagdev
Infosys added 38 clients (36-Q3 FY06 and 37-Q4 FY05) and net 3293 employees
in the quarter. More importantly, the number of 1mn$+ annual run-rate
clients increased to 221 and the laterals formed almost 49% of the net
additions during the quarter. The blended manpower utilization excluding
trainees was lower at 77% against 78.7% in the last quarter.
For the full year FY07, management surprised everybody by issuing a robust
revenue and earnings growth guidance. Company expects revenue growth of
28.7-30.7% to Rs122.54-124.46bn and EPS growth of 26.5-28.5% to
Rs113.9-115.6. Further, it anticipates operating margin to remain flat yoy
for the full year and improvement in quarterly margins as the year
progresses. Guidance has been issued assuming the year-end exchange rate of
Rs44.48/$ and stable pricing environment. More importantly, guidance has
been given based on current visibility and comfort i.e. based on regular
organic business and does not factor any large deals wins (like ABN Amro
last year), which if happens would lead to easy overachievement of EPS
guidance.
Though disappointed with Q4 FY06 performance of the company, the buoyant
above consensus FY07 guidance makes us extremely positive on the future
growth prospects of the company.
*Based on quick estimates, we expect company to post an EPS between
Rs118-119 in FY07 and Rs150-151 in FY08. We maintain 'BUY' with a one–year
price target of Rs3,770 based on 25x 1-year rolling P/E on FY08E EPS. *
in the quarter. More importantly, the number of 1mn$+ annual run-rate
clients increased to 221 and the laterals formed almost 49% of the net
additions during the quarter. The blended manpower utilization excluding
trainees was lower at 77% against 78.7% in the last quarter.
For the full year FY07, management surprised everybody by issuing a robust
revenue and earnings growth guidance. Company expects revenue growth of
28.7-30.7% to Rs122.54-124.46bn and EPS growth of 26.5-28.5% to
Rs113.9-115.6. Further, it anticipates operating margin to remain flat yoy
for the full year and improvement in quarterly margins as the year
progresses. Guidance has been issued assuming the year-end exchange rate of
Rs44.48/$ and stable pricing environment. More importantly, guidance has
been given based on current visibility and comfort i.e. based on regular
organic business and does not factor any large deals wins (like ABN Amro
last year), which if happens would lead to easy overachievement of EPS
guidance.
Though disappointed with Q4 FY06 performance of the company, the buoyant
above consensus FY07 guidance makes us extremely positive on the future
growth prospects of the company.
*Based on quick estimates, we expect company to post an EPS between
Rs118-119 in FY07 and Rs150-151 in FY08. We maintain 'BUY' with a one–year
price target of Rs3,770 based on 25x 1-year rolling P/E on FY08E EPS. *