![]() We increase our FY24E EPS estimate by ~1.2% and maintain our BUY rating. The margin expanded 40bps QoQ, led by a better margin in services and DLM. Management guidance of 13-15% YoY CC organic growth and EBIT margin of 13-14% appear encouraging. The deal wins remain strong for the DLM business and a total TCV of USD 105mn indicates a positive momentum. The company has announced restructuring/demerger of the DLM business, which we believe is a positive step. Transportation (railways) and utilities continue to drag growth and some respite is likely in H2. Aerospace will continue to deliver growth and communication will revive, led by 5G network rollout. Investments in new areas (EV and mobility) will help the company align its growth with the industry. ![]() The services growth was driven by the aerospace vertical and new growth areas like automotive and mobility. Key drivers for INFO include the following: (1) strong large deal bookings with USD 3.3bn TCV in Q3 9MFY23 net-new large deal bookings that.Ĭyient: Cyient reported a decent quarter revenue was up 10% QoQ CC (in line with estimate), led by core services (+12.3% QoQ CC, +3% organic). INFO's revenue guidance increased from 15-16% CC to 16.0-16.5% CC, implying ~2.5% QoQ for Q4FY23E. Revenue growth at 2.4% QoQ and 13.7% YoY CC was ahead of consensus, supported by higher pass-through revenue which was linked to integrated deals. Infosys: Infosys (INFO) posted a slightly higher revenue growth in Q3 and increased its FY23E revenue guidance. The stock is trading at 15/13x FY24/25E, a steep discount of ~50% to ER&D peers. We maintain our BUY rating with a target price of INR 1,030, based on 16x Sep-24E EPS. We increase our FY24/25E EPS estimate by ~2-4%, led by improving visibility. For FY23E, the management expects double-digit organic growth, ~14-15% inorganic and EBIT margin of ~13-14%. The proposed listing of the DLM (DRHP filed) will lead to value unlocking. ![]() The company is gearing to hit double-digit growth, led by (1) investments in new areas (EV and mobility), (2) strong growth in Aerospace led by top client, (3) a healthy deal pipeline (+1.5x YoY) comprising ~70% of large deals, (4) strong order intake of USD 237mn (+18% YoY, 15-quarter high), and (5) expected recovery in communication and rail transport verticals. The services growth in the quarter was led by aerospace, MEU and new growth areas like automotive and healthcare. ![]() We also believe that there's a low probability of structural risk to the margin.Ĭyient: Cyient reported a strong quarter, with core services organic growth of 3.7% QoQ CC (reported +11.9% QoQ CC) and better-than-expected margin expansion of 100bps. ![]() We reckon that there's a high probability of INFO delivering the mid-point of its guidance band and improving its growth trajectory beyond. So the cut in estimates is a bigger function of the FY23 exit rate rather than the guidance provided (4-7% CC). The low probability sequential decline (eight times in the last sixty quarters and four times ex-GFC and Covid quarters) was due to a combination of deal cancellations and deferrals largely centric in NorthAm (BFSI & communication vertical in NorthAm was 70% of the sequential drop). The near-inevitable happened, but Infosys' (INFO) Q4 can pass on as an aberration even as macro headwinds persist. Our revised TP of INR 1,470 is based on 21x Dec-24E (25x earlier) which is ~20% discount to TCS' valuations based on relative growth discount. We cut estimates by 4-5% and downgrade INFO to ADD (from BUY earlier). However, recent senior-level exits and the possibility of continued stress from large accounts are risks to growth. ![]()
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