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R Ravi of Karvy Stock Broking comments on the expected performance of Infosys in this quarter. He feels that there is going to be a very strong pricing improvement.
Ravi is not expecting volume growth to be significant.He predicts that the positive surprise would be the increase on the billing rate and the revenue from the US will be coming down.
Excerpts from CNBC-TV18's exclusive interview with R Ravi:
Q: What do you expect from Infosys this quarter?
A: I am expecting 6.8% sequential growth in net profits to Rs 992 cr and I think it is slightly more than what the market consensus is of Rs 982. In terms of revenue growth I am expecting 8.3% and I am not expecting any serious operating margin contraction and actually it will hold on to the last quarter level. Most analyst are not factoring the kind of billing rate increase they may get, I think we will all be positively surprised by the company.
I think there is going to be a very strong pricing improvement and there could be a strong increase in offshore, all these are going to keep the operating margin level at the last quarter level of 30.1 despite the utilisation rate dipping a bit.
Q: Could there be any surprises on the volume growth front because most people are going by 9-10% volume growth and are subtracting the rupee appreciation from that?
A: I am not expecting volume growth to be anything significant and different because you are going to lose 4% on account of man dates on account of Christmas and New Year in US but where there will be positive surprise would be the billing rates. The company can get close to 1.5% increase in billing rates though I have not factored that but we could see a repeat of increase in billing rates like what we saw in the last quarter. If that happens, that would seriously mitigate the rupee appreciation to a great extent.
Q: Do you expect the company to up its full year guidance?
A: Well it might be a moderate rise, we are expecting a full year EPS of Rs 70 and I am not seeing anything significantly up. I think the company would close the year with Rs 70 and maybe for next year the company would end up doing and EPS of close to Rs 90-95.
So the positive surprise would be the increase on billing rate and secondly what we will see going forward is that the revenue from US will be coming down and probably an increase in revenues from Japan will happen over the next 4-8 quarters and maybe even Europe will go up significantly and that is going to be a serious de-risking of revenues not only by geography but also de-risking of revenues by currency, so even if the dollar depreciates the impact on margins will be minimal and the fear of wage will go up and that will have impact on the balance sheet and profitability.
R Ravi of Karvy Stock Broking comments on the expected performance of Infosys in this quarter. He feels that there is going to be a very strong pricing improvement.
Ravi is not expecting volume growth to be significant.He predicts that the positive surprise would be the increase on the billing rate and the revenue from the US will be coming down.
Excerpts from CNBC-TV18's exclusive interview with R Ravi:
Q: What do you expect from Infosys this quarter?
A: I am expecting 6.8% sequential growth in net profits to Rs 992 cr and I think it is slightly more than what the market consensus is of Rs 982. In terms of revenue growth I am expecting 8.3% and I am not expecting any serious operating margin contraction and actually it will hold on to the last quarter level. Most analyst are not factoring the kind of billing rate increase they may get, I think we will all be positively surprised by the company.
I think there is going to be a very strong pricing improvement and there could be a strong increase in offshore, all these are going to keep the operating margin level at the last quarter level of 30.1 despite the utilisation rate dipping a bit.
Q: Could there be any surprises on the volume growth front because most people are going by 9-10% volume growth and are subtracting the rupee appreciation from that?
A: I am not expecting volume growth to be anything significant and different because you are going to lose 4% on account of man dates on account of Christmas and New Year in US but where there will be positive surprise would be the billing rates. The company can get close to 1.5% increase in billing rates though I have not factored that but we could see a repeat of increase in billing rates like what we saw in the last quarter. If that happens, that would seriously mitigate the rupee appreciation to a great extent.
Q: Do you expect the company to up its full year guidance?
A: Well it might be a moderate rise, we are expecting a full year EPS of Rs 70 and I am not seeing anything significantly up. I think the company would close the year with Rs 70 and maybe for next year the company would end up doing and EPS of close to Rs 90-95.
So the positive surprise would be the increase on billing rate and secondly what we will see going forward is that the revenue from US will be coming down and probably an increase in revenues from Japan will happen over the next 4-8 quarters and maybe even Europe will go up significantly and that is going to be a serious de-risking of revenues not only by geography but also de-risking of revenues by currency, so even if the dollar depreciates the impact on margins will be minimal and the fear of wage will go up and that will have impact on the balance sheet and profitability.
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