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Infosys Posted Good Numbers-VRK100-13Oct2011

Infosys Posted Good Numbers-VRK100-13Oct2011

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Infosys has recorded good performance during July-September 2011 quarter. It has beaten the market expectations and the stock has gone up by 7% on 12 October 2011. Here is an analysis of the results by Rama Krishna Vadlamudi, Hyderabad.
Infosys has recorded good performance during July-September 2011 quarter. It has beaten the market expectations and the stock has gone up by 7% on 12 October 2011. Here is an analysis of the results by Rama Krishna Vadlamudi, Hyderabad.

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Published by: RamaKrishna Vadlamudi on Oct 13, 2011
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Rama Krishna Vadlamudi, HYDERABAD 13 October 2011
“Under promise and over achieve,” is the corporate mantra of Infosys Limited, the second largest IT services company in India. Thcompany has stuck to its mantra by posting results higher than its guidance during the second quarter of July-September 2011. The pleasant surprise from the company has boosted the share price by about seven per cent on 12 October 2011, the day the quarterly were declared. Of course, the performance is aided in part by thfavourable exchange rate between dollar and Indian rupee. The stock is expected to give decent returns to investors.
The second quarter results are much better than the marketexpectations and are given below:
Sep.11Jun.11% RiseSep.10% RiseRs CroreRs Crore Rs CroreSales8 0997 4858.26 94716.6Net Profit1 9061 72210.71 7379.7
The highlights of the July-September Quarter Results are:
Sales have gone up by 8.2% on a sequential basis and 16.6%on year-on-year basis
Net profit has grown by 10.7% on a sequential basis and 9.7% y-o-y basis
In constant currency terms, the revenue growth is five per cent
The company has added 45 new clients during the 2
nd
quarter
Operating margin has improved to 28% from 26.1%
The rupee depreciation against the dollar of 10 per cent in thelast two months has helped the company partly in posting goodperformance
 
Company is facing tough times due to high unemployment in theUS though it is not seeing any project cancellations
Sixty-five per cent of the total business is from the US
Cash & cash equivalents are Rs 18,536 crore as on 30Sep2011
Total employees are 1,41,822 as on 30Sep2011
Higher guidance
For the full year 2011-12, the management has hiked its revenueguidance in rupee terms to Rs.33,501-Rs.34,088 crore, as against itsprevious guidance of Rs.31,777-32,311 crore, indicating a growth of21.8-24.0 per cent year-on-year, as against its earlier guided growthof 15.5-17.5 per cent year-on-year. The management has also raisedits EPS (earnings per share) guidance to Rs.143.02-145.26, asagainst its previous guidance of Rs.128.20-130.08, showing anincrease of 19.7-21.6 per cent y-o-y, as against its earlier guidedgrowth of 7.3-8.9 per cent y-o-y.
Valuation
The current market price of the stock is Rs 2,700 as the close of 13October 2011 when the Sensex closed for the day at 16,884 and Niftyat 5,078. The forward P/E for FY2011-12 ratio works out to 18.60.Though the company is cautious about the uncertain globalenvironment, investors can bank on the blue chip company’s sharewhile keeping a close watch on the dollar-rupee exchange rate andglobal developments. The company is strongly placed to weather theglobal head winds and is expected to provide decent returns.The current performance trend of the company indicates that it willget revenue boost from large orders going forward. The company’smargins too are likely to improve in the next few quarters due partly tothe rupee depreciation against the dollar.
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 Note on author: Author is an investment analyst and writer. The views are personal and this is written only for information purpose. The author has a vested interest in the stock markets. Readers are advised to consult their certified financial adviser before taking any investment decisions.

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