Infosys Technologies‘ FY2012 Results are Pathetic. Revenues stood at USD 1771 mn posting a decline of 1.9% QoQ missing the already muted guidance of USD 1810 mn. EBITDA margins stood at 32.6%, declining 110 bps QoQ primarily due to rupee appreciation. While the utilization declined 440 bps QoQ to 73%, rationalization of other expenses has witnessed some tailwinds.
Guidance: INFY guided for FY13 US$ revenue growth rate of 8%-10%, below our expectations of 11%-14% and INR EPS guidance of Rs158.76-Rs161.41 (at Rs50.88/USD), implying 9.1%-10.9% growth. Gross hiring guidance is at 35k (45k additions in FY12). EBIT margin may decline by 50- 100 bp for FY13, but INFY is not planning any wage hikes for FY13 currently. For 1QFY13, INFY has guided for 0%-1% US$ revenue growth. The revenue growth guidance fell well short of the Street’s expectations and Nasscoms guidance of a 11-14% growth.
Infosys is now facing a big credibility gap on its guidance policy even as its financial performance has deteriorated. The company’s decision against giving out wage hikes in FY13 to its Employees was yet another surprise. Despite that, and additional tailwind from 5.8% YoY depreciation in the INR v/s USD (at assumed INR rate of 50.88 for FY13, which is a 230bp tailwind to the margins), it guided for a decline of 50-100bp in FY13 which is Bad in our view.
Infosys’ historical PE premium was based on its predictable financial results and credible guidance. However, the recent run of results have put a big question mark. So in the midst of such a scenario and the stock instantly crashing what should be Investors Strategy towards once upon a time leader in the Oustourcing Saga.
Infosys EPS for FY 2013 and Stock Target Prices According to Various Analysts
Deutsche Bank Rs 162 / Rs 3100
Motilal Oswal Rs 160 / Rs 2900
Nomura Rs 168 / Rs 3350
Citigroup Rs 161 / Rs 2750
JP Morgan Rs 169 / Rs 2900
BNP Paribas Rs 158 / Rs 2500 – REDUCE
EMKAY Rs 162 / Rs 2800
Angel Broking Rs 159 / Rs 2792
Ambit Capital Rs 160 / Rs 2628
Edelweiss Rs 161 / Rs 2650
Kotak Securities Rs 161 / Rs 2750
SBI Cap Securities – Rs 16 / Rs 2850
We will Update as we get more Inputs. Stay Tuned.