JPM Infosys
On the front foot - strong commentary and guidance raise; limited scope for near
term margin expansion
Infosys delivered a mixed 1Q22 print with a strong revenue beat, misses on
margins/EPS and solid deal wins. Strongest 1Q QQ and YY organic growth in a decade
and a strong demand environment has inspired an increase in FY22 CC revenue growth
guidance by 200bps to 14-16%. FY22 margin guidance has been retained at 22-24% as
company sees incremental headwinds from retention, back filling attrition and
subcontractors, and while near term levers from pyramid optimization and automation
appear limited. We raise FY22-24 revenues by 1-2% but cut margins by 16-74bps over
FY22-24 leading to 0-3% cut to EPS and 1% cut to PT. Infosys remains our top pick in
the sector, as it benefits from growth acceleration and share gains while maintaining
margins.
On the front foot - strong commentary and guidance raise; limited scope for near
term margin expansion
Infosys delivered a mixed 1Q22 print with a strong revenue beat, misses on
margins/EPS and solid deal wins. Strongest 1Q QQ and YY organic growth in a decade
and a strong demand environment has inspired an increase in FY22 CC revenue growth
guidance by 200bps to 14-16%. FY22 margin guidance has been retained at 22-24% as
company sees incremental headwinds from retention, back filling attrition and
subcontractors, and while near term levers from pyramid optimization and automation
appear limited. We raise FY22-24 revenues by 1-2% but cut margins by 16-74bps over
FY22-24 leading to 0-3% cut to EPS and 1% cut to PT. Infosys remains our top pick in
the sector, as it benefits from growth acceleration and share gains while maintaining
margins.
Trading Tweaks
Record Date Final Dividend: Rane Engine Valve, Laxmi Organic Industries, Moksh Ornaments
Ex-Date Final Dividend: IGL Petrochemicals, APL Apollo Tubes, Dhanuka Agritech, Atul, Nucleus Software Exports, Mahindra & Mahindra, Bharat Forge, Cosmo Films, Coromandel International, Escorts, Tata Consultancy Services
Price Band Revised From 10% To 5%: Vascon Engineering
Price Band Revised From 20% to 10%: Aditya Birla Money, Goodluck India, Vardhman Holdings
Move Into Short-Term ASM Framework: Edelweiss Financial Services, Rane Brake Lining, Dolat Investments, Prime Securities
Move Into Long-Term ASM Framework: Expleo Solutions, Vardhman Holdings
Move Out Of Short-Term ASM Framework: Crisil, Heritage Foods, Apex Frozen Foods, Privi Speciality Chemicals, Univastu India
Record Date Final Dividend: Rane Engine Valve, Laxmi Organic Industries, Moksh Ornaments
Ex-Date Final Dividend: IGL Petrochemicals, APL Apollo Tubes, Dhanuka Agritech, Atul, Nucleus Software Exports, Mahindra & Mahindra, Bharat Forge, Cosmo Films, Coromandel International, Escorts, Tata Consultancy Services
Price Band Revised From 10% To 5%: Vascon Engineering
Price Band Revised From 20% to 10%: Aditya Birla Money, Goodluck India, Vardhman Holdings
Move Into Short-Term ASM Framework: Edelweiss Financial Services, Rane Brake Lining, Dolat Investments, Prime Securities
Move Into Long-Term ASM Framework: Expleo Solutions, Vardhman Holdings
Move Out Of Short-Term ASM Framework: Crisil, Heritage Foods, Apex Frozen Foods, Privi Speciality Chemicals, Univastu India
*Hatsun Agro Product Ltd.* | *CMP* Rs. 996 | *M Cap* Rs. 21474 Cr | *52 W H/L* 996/456
(Nirmal Bang Retail Research)
*Result is ok*
Revenue from Operations came at Rs. 1544.7 Cr (-1.5% QoQ, 20.7% YoY) vs QoQ Rs. 1568.9 Cr, YoY Rs. 1279.3 Cr
EBIDTA came at Rs. 178 Cr (-5.9% QoQ, -5.8% YoY) vs QoQ Rs. 189.2 Cr, YoY Rs. 189 Cr
EBITDA Margin came at 11.5% vs QoQ 12.1%, YoY 14.8%
Adj. PAT came at Rs. 58.3 Cr vs QoQ Rs. 57.1 Cr, YoY Rs. 56.1 Cr
Quarter EPS is Rs. 2.7
Share is trading at P/E of 86.4x TTM EPS
(Nirmal Bang Retail Research)
*Result is ok*
Revenue from Operations came at Rs. 1544.7 Cr (-1.5% QoQ, 20.7% YoY) vs QoQ Rs. 1568.9 Cr, YoY Rs. 1279.3 Cr
EBIDTA came at Rs. 178 Cr (-5.9% QoQ, -5.8% YoY) vs QoQ Rs. 189.2 Cr, YoY Rs. 189 Cr
EBITDA Margin came at 11.5% vs QoQ 12.1%, YoY 14.8%
Adj. PAT came at Rs. 58.3 Cr vs QoQ Rs. 57.1 Cr, YoY Rs. 56.1 Cr
Quarter EPS is Rs. 2.7
Share is trading at P/E of 86.4x TTM EPS
Money Market Update
The rupee ended at 74.58 against the U.S. Dollar on Wednesday as compared to Tuesday’s closing of 74.49.
The rupee ended at 74.58 against the U.S. Dollar on Wednesday as compared to Tuesday’s closing of 74.49.
Pledge Share Details
Embassy Office Parks REIT: Promoter Embassy Property Developments Pvt. Ltd. revoked a pledge of 3.88 crore shares on March 30.
Gayatri Projects: Promoter T Indira Reddy invoked a pledge of 32.5 lakh shares on July 8.
Steel Strips Wheels: Promoter Dheeraj Garg revoked a pledge of 1.33 lakh shares on July 13.
Embassy Office Parks REIT: Promoter Embassy Property Developments Pvt. Ltd. revoked a pledge of 3.88 crore shares on March 30.
Gayatri Projects: Promoter T Indira Reddy invoked a pledge of 32.5 lakh shares on July 8.
Steel Strips Wheels: Promoter Dheeraj Garg revoked a pledge of 1.33 lakh shares on July 13.
Insider Trades
Transpek Industry: Promoter Kantisen Chaturbhurj Shroff sold 40,690 shares on July 8. Promoter Dipesh Kantisen Shroff acquired 81,380 shares on July 8.
DCW: Promoter Vibha Swarup acquired 65,750 shares between March 17 and April 16. Promoter Divyaa Kummar acquired 43,250 shares on May 10
Transpek Industry: Promoter Kantisen Chaturbhurj Shroff sold 40,690 shares on July 8. Promoter Dipesh Kantisen Shroff acquired 81,380 shares on July 8.
DCW: Promoter Vibha Swarup acquired 65,750 shares between March 17 and April 16. Promoter Divyaa Kummar acquired 43,250 shares on May 10
J.B.CHEMICALS & PHARMACEUTICALS: HDFC SMALL CAP FUND SOLD 1.04% STAKE || INSURANCE COMPANIES KOTAK MAHINDRA LIFE INSURANCE COMPANY LTD SOLD 1.08% STAKE
CENTURY TEXTILES & INDUSTRIES: MUTUAL FUNDS INCREASED 1.20% STAKE ||ADITYA BIRLA SUN LIFE TRUSTEE PRIVATE LIMITED A/C ADITYA BIRLA SUN LIFE FLEXI CAP FUND INCREASED 1.30% STAKE ||
FOREIGN PORTFOLIO INVESTORS VANDERBILT UNIVERSITY - ATYANT CAPITAL MANAGEMENT LIMITED REDUCE 0.20% STAKE || INDIVIDUAL INVESTOR REDUCE 0.20% STAKE IN Q1
FOREIGN PORTFOLIO INVESTORS VANDERBILT UNIVERSITY - ATYANT CAPITAL MANAGEMENT LIMITED REDUCE 0.20% STAKE || INDIVIDUAL INVESTOR REDUCE 0.20% STAKE IN Q1
LTTS Concall Update
(Nirmal Bang Retail Research)
*Outlook – Positive*
*Revenue growth has been raised to 15-17%. Residual wage hike at mid to senior level will have an impact on margins in Q2 which will be offset by better employee pyramid, higher productivity and growth. Management would focus on Improving margins in telecom and hi tech sector. On an overall level management indicates to sustain the margins and strengthen the operating model*
• CC QoQ came at 4.3% Dollar revenue came at $ 205.2 Mn,(4% QoQ, 20% YoY)
• EBIT Margin improved by 68 bps and came at 17.3% this was despite wage hike impact .
• During the quarter, LTTS won 6 deals with TCV of USD10 million plus, which includes 2 USD25 million plus deals. Revenues from digital stood at 54% vs 52% during the quarter.
• On vertical front , growth is broad based across all verticals. Industrial Products grew 8% sequential and its quarterly run rate of $40mn has crossed the pre-Covid peak. Good growth momentum is expected to continue from transportation, Process engineering, telecom, industrial products. Medical devices will start seeing jump from Q2 onwards as deal traction improves
• On geographical front , Us and Europe is doing good , on Japan and India front decision making is slowly improving and growth is expected to be broad based going ahead.
• Tax rate is expected to be 26.5-27% for full year
• Adj. PAT came at Rs. 226.5 Cr
• Quarter EPS is Rs. 21.6
• Stock is trading at P/E of 28.9x FY23E EPS
(Nirmal Bang Retail Research)
*Outlook – Positive*
*Revenue growth has been raised to 15-17%. Residual wage hike at mid to senior level will have an impact on margins in Q2 which will be offset by better employee pyramid, higher productivity and growth. Management would focus on Improving margins in telecom and hi tech sector. On an overall level management indicates to sustain the margins and strengthen the operating model*
• CC QoQ came at 4.3% Dollar revenue came at $ 205.2 Mn,(4% QoQ, 20% YoY)
• EBIT Margin improved by 68 bps and came at 17.3% this was despite wage hike impact .
• During the quarter, LTTS won 6 deals with TCV of USD10 million plus, which includes 2 USD25 million plus deals. Revenues from digital stood at 54% vs 52% during the quarter.
• On vertical front , growth is broad based across all verticals. Industrial Products grew 8% sequential and its quarterly run rate of $40mn has crossed the pre-Covid peak. Good growth momentum is expected to continue from transportation, Process engineering, telecom, industrial products. Medical devices will start seeing jump from Q2 onwards as deal traction improves
• On geographical front , Us and Europe is doing good , on Japan and India front decision making is slowly improving and growth is expected to be broad based going ahead.
• Tax rate is expected to be 26.5-27% for full year
• Adj. PAT came at Rs. 226.5 Cr
• Quarter EPS is Rs. 21.6
• Stock is trading at P/E of 28.9x FY23E EPS
Infosys Concall Update
(Nirmal Bang Retail Research)
*Outlook – Long term Positive*
Revenue guidance has been upgraded to 14%-16% for FY22. Going ahead , Salary revision will kick from July & discretionary cost like travelling cost will start normalising which will have an impact on margins however with improving efficiency management is confident about achieving margin in the range of 22-24%
• TCV($ MN) came strong at $ 2570 Mn .Share of new deal is 40%
• Revenue growth in CC terms QoQ came at 4.8% Dollar revenue came at $ 3782 Mn,(4.7% QoQ, 21.2% YoY) . Revenue is driven by organic growth especially supported by growth in the area of digital solutions.
• Digital revenues came at 53.9% of total revenues
• Growth is Broad based across all sectors and geography. On Vertical Front , Retail has improved QoQ with new deals signed and ramp up . Clients continue to invest in analytics, personalisation with reduction in cost. Communication improved with ramp up of prior deal. Energy vertical grew with good deal wins, outlook is improving with clients slowly getting back to discretionary spending. Manufacturing - Infosys grew on all sub segments
• 113 new clients added in quarter
• EBIT Margin dipped by 80 bps and came at 23.5% , Improvement was led by cross currency movement by 10 bps , higher utilisation by 40 bps which was offset by higher third party and subcontracting cost and third party cost by 50 bps and higher employee hiring led to impact of 80 bps.
• Attrition increased from 10.9% to 13.9% this quarter. Attrition is expected to be high in near term due to strong demand
• Net head count increase of around 8300 taking the total to 267953
• Adj. PAT came at Rs. 5195 Cr
• Quarter EPS is Rs. 12.2
• Stock is trading at P/E of 26.4x FY23E EPS
(Nirmal Bang Retail Research)
*Outlook – Long term Positive*
Revenue guidance has been upgraded to 14%-16% for FY22. Going ahead , Salary revision will kick from July & discretionary cost like travelling cost will start normalising which will have an impact on margins however with improving efficiency management is confident about achieving margin in the range of 22-24%
• TCV($ MN) came strong at $ 2570 Mn .Share of new deal is 40%
• Revenue growth in CC terms QoQ came at 4.8% Dollar revenue came at $ 3782 Mn,(4.7% QoQ, 21.2% YoY) . Revenue is driven by organic growth especially supported by growth in the area of digital solutions.
• Digital revenues came at 53.9% of total revenues
• Growth is Broad based across all sectors and geography. On Vertical Front , Retail has improved QoQ with new deals signed and ramp up . Clients continue to invest in analytics, personalisation with reduction in cost. Communication improved with ramp up of prior deal. Energy vertical grew with good deal wins, outlook is improving with clients slowly getting back to discretionary spending. Manufacturing - Infosys grew on all sub segments
• 113 new clients added in quarter
• EBIT Margin dipped by 80 bps and came at 23.5% , Improvement was led by cross currency movement by 10 bps , higher utilisation by 40 bps which was offset by higher third party and subcontracting cost and third party cost by 50 bps and higher employee hiring led to impact of 80 bps.
• Attrition increased from 10.9% to 13.9% this quarter. Attrition is expected to be high in near term due to strong demand
• Net head count increase of around 8300 taking the total to 267953
• Adj. PAT came at Rs. 5195 Cr
• Quarter EPS is Rs. 12.2
• Stock is trading at P/E of 26.4x FY23E EPS
*Dodla Dairy Ltd* | *CMP* Rs. 621 | *M Cap* Rs. 3695 Cr | *52 W H/L* 621/
(Nirmal Bang Retail Research)
*Result is for March Qtr*
*Result is declining*
Revenue from Operations came at Rs. 530.5 Cr (6.7% QoQ, 0.6% YoY) vs QoQ Rs. 497.2 Cr, YoY Rs. 527.4 Cr
EBIDTA came at Rs. 36 Cr (-48.8% QoQ, 154.3% YoY) vs QoQ Rs. 70.3 Cr, YoY Rs. 14.1 Cr
EBITDA Margin came at 6.8% vs QoQ 14.1%, YoY 2.7%
Adj. PAT came at Rs. 9.6 Cr vs QoQ Rs. 41.6 Cr, YoY Rs. -1.9 Cr
Quarter EPS is Rs. 1.6
(Nirmal Bang Retail Research)
*Result is for March Qtr*
*Result is declining*
Revenue from Operations came at Rs. 530.5 Cr (6.7% QoQ, 0.6% YoY) vs QoQ Rs. 497.2 Cr, YoY Rs. 527.4 Cr
EBIDTA came at Rs. 36 Cr (-48.8% QoQ, 154.3% YoY) vs QoQ Rs. 70.3 Cr, YoY Rs. 14.1 Cr
EBITDA Margin came at 6.8% vs QoQ 14.1%, YoY 2.7%
Adj. PAT came at Rs. 9.6 Cr vs QoQ Rs. 41.6 Cr, YoY Rs. -1.9 Cr
Quarter EPS is Rs. 1.6
JUBILANT INGREVIA: FOREIGN PORTFOLIO INVESTORS EAST BRIDGE CAPITAL MASTER FUND LIMITED REDUCE 1% STAKE ,GOVERNMENT PENSION FUND GLOBAL REDUCE 0.60% STAKE IN Q
Bulk Deal as on 14-07-21
Abans Enterprises
+ 7 Lk @ 135 Delight International Trading F.Z.C
- 7 Lk @ 135 Shreeji Corporate Solutions & Trade LLP
Indo National
- 54 K @ 1079.32 Hdfc Bank Ltd
Max India Ltd
- 4.23 Lk @ 74.33 Ratnabali Securities Pvt Ltd
- 3 Lk @ 75.6 Equity Intelligence Ltd
Abans Enterprises
+ 7 Lk @ 135 Delight International Trading F.Z.C
- 7 Lk @ 135 Shreeji Corporate Solutions & Trade LLP
Indo National
- 54 K @ 1079.32 Hdfc Bank Ltd
Max India Ltd
- 4.23 Lk @ 74.33 Ratnabali Securities Pvt Ltd
- 3 Lk @ 75.6 Equity Intelligence Ltd
GARDEN REACH SHIPBUILDERS & ENGINEERS: MUTUAL FUNDS REDUCE 0.98% STAKE || LIC SOLD 1.26% STAKE IN Q1
RALLIS INDIA: MUTUAL FUNDS INCREASED 0.70% STAKE || BAJAJ ALLIANZ LIFE INSURANCE COMPANY LTD ACQUIRED 1.05% STAKE IN Q1
*Infosys Ltd.* | *CMP* Rs. 1576 | *M Cap* Rs. 671581 Cr | *52 W H/L* 1591/781
(Nirmal Bang Retail Research)
*Revenue guidance for FY22 revised to 14%-16% vs previous guidance of 12%-14%. Margin guidance retained at 22%-24%*
*Result ahead of expectation*
TCV($ MN) came at $ 2570 Mn vs QoQ $ 2111 Mn, YoY $ 1744 Mn
Revenue growth in CC terms QoQ came at 4.8% vs expectation of 4%, QoQ 2%, YoY -2%
Dollar revenue came at $ 3782 Mn,(4.7% QoQ, 21.2% YoY) vs expectation of $ 3756.3 Mn, QoQ $ 3613 Mn, YoY $ 3121 Mn
Net sales came at Rs. 27896 Cr (6% QoQ, 17.9% YoY) vs expectation of Rs. 27655 Cr, QoQ Rs. 26311 Cr, YoY Rs. 23665 Cr
EBIT came at Rs. 6554 Cr (2.6% QoQ, 23.3% YoY) vs expectation of Rs. 6764.4 Cr, QoQ Rs. 6390 Cr, YoY Rs. 5317 Cr
EBIT Margin came at 23.5% vs expectation of 24.5%, QoQ 24.3%, YoY 22.5%
Adj. PAT came at Rs. 5195 Cr vs expectation of Rs. 5378 Cr, QoQ Rs. 5076 Cr, YoY Rs. 4233 Cr
Quarter EPS is Rs. 12.2
Stock is trading at P/E of 26.4x FY23E EPS
(Nirmal Bang Retail Research)
*Revenue guidance for FY22 revised to 14%-16% vs previous guidance of 12%-14%. Margin guidance retained at 22%-24%*
*Result ahead of expectation*
TCV($ MN) came at $ 2570 Mn vs QoQ $ 2111 Mn, YoY $ 1744 Mn
Revenue growth in CC terms QoQ came at 4.8% vs expectation of 4%, QoQ 2%, YoY -2%
Dollar revenue came at $ 3782 Mn,(4.7% QoQ, 21.2% YoY) vs expectation of $ 3756.3 Mn, QoQ $ 3613 Mn, YoY $ 3121 Mn
Net sales came at Rs. 27896 Cr (6% QoQ, 17.9% YoY) vs expectation of Rs. 27655 Cr, QoQ Rs. 26311 Cr, YoY Rs. 23665 Cr
EBIT came at Rs. 6554 Cr (2.6% QoQ, 23.3% YoY) vs expectation of Rs. 6764.4 Cr, QoQ Rs. 6390 Cr, YoY Rs. 5317 Cr
EBIT Margin came at 23.5% vs expectation of 24.5%, QoQ 24.3%, YoY 22.5%
Adj. PAT came at Rs. 5195 Cr vs expectation of Rs. 5378 Cr, QoQ Rs. 5076 Cr, YoY Rs. 4233 Cr
Quarter EPS is Rs. 12.2
Stock is trading at P/E of 26.4x FY23E EPS
*L&T Technology Services Ltd.* | *CMP* Rs. 2910 | *M Cap* Rs. 30584 Cr | *52 W H/L* 3062/1325
(Nirmal Bang Retail Research)
*Revenue growth has been raised to 15-17% vs previous guidance of 13-15%*
*Result is above expectation*
CC QoQ came at 4.3% vs expectation of 3.6%, QoQ 3.8%, YoY -12.7%
Dollar revenue came at $ 205.2 Mn,(4% QoQ, 20% YoY) vs expectation of $ 204.4 Mn, QoQ $ 197.4 Mn, YoY $ 171 Mn
Net sales came at Rs. 1518.4 Cr (5.4% QoQ, 17.3% YoY) vs expectation of Rs. 1514.7 Cr, QoQ Rs. 1440.5 Cr, YoY Rs. 1294.7 Cr
EBIT came at Rs. 262.3 Cr (9.7% QoQ, 67.4% YoY) vs expectation of Rs. 236.9 Cr, QoQ Rs. 239.1 Cr, YoY Rs. 156.7 Cr
EBIT Margin came at 17.3% vs expectation of 15.6%, QoQ 16.6%, YoY 12.1%
Adj. PAT came at Rs. 226.5 Cr vs expectation of Rs. 197.7 Cr, QoQ Rs. 194.5 Cr, YoY Rs. 117.2 Cr
Quarter EPS is Rs. 21.6
Stock is trading at P/E of 28.9x FY23E EPS
(Nirmal Bang Retail Research)
*Revenue growth has been raised to 15-17% vs previous guidance of 13-15%*
*Result is above expectation*
CC QoQ came at 4.3% vs expectation of 3.6%, QoQ 3.8%, YoY -12.7%
Dollar revenue came at $ 205.2 Mn,(4% QoQ, 20% YoY) vs expectation of $ 204.4 Mn, QoQ $ 197.4 Mn, YoY $ 171 Mn
Net sales came at Rs. 1518.4 Cr (5.4% QoQ, 17.3% YoY) vs expectation of Rs. 1514.7 Cr, QoQ Rs. 1440.5 Cr, YoY Rs. 1294.7 Cr
EBIT came at Rs. 262.3 Cr (9.7% QoQ, 67.4% YoY) vs expectation of Rs. 236.9 Cr, QoQ Rs. 239.1 Cr, YoY Rs. 156.7 Cr
EBIT Margin came at 17.3% vs expectation of 15.6%, QoQ 16.6%, YoY 12.1%
Adj. PAT came at Rs. 226.5 Cr vs expectation of Rs. 197.7 Cr, QoQ Rs. 194.5 Cr, YoY Rs. 117.2 Cr
Quarter EPS is Rs. 21.6
Stock is trading at P/E of 28.9x FY23E EPS
KINGFA SCIENCE & TECHNOLOGY (INDIA): INDIVIDUAL INVESTOR MUKUL MAHAVIRPRASAD AGRAWAL INCREASED 0.80% STAKE INQ1
SANOFI INDIA: MUTUAL FUNDS INCREASED 0.30% STAKE || LIFE INSURANCE CORPORATION OF INDIA INCREASED 0.30% STAKE IN Q1