KR Choksey's research report on Infosys
Revenue in constant currency terms grew 11.7% yoy to USD 3,060mn in Q4 FY19 (up 2.1% qoq) which was above our estimates of $3,031 mn. The revenue growth was supported by improvement in global IT spending environment across key verticals, especially Communications and Healthcare. Operating margin of 21.4% in Q4 FY19 was down 113 bps qoq (down 191 bps yoy) impacted by higher direct cost % of revenue.
Outlook
Infosys is currently trading at a P/E multiple of 19.5x/18.5x on FY20E/FY21E earnings. We conservatively apply a P/E multiple of 19.8x to the FY20 estimated EPS of INR 38.4 to arrive at a revised target price of INR 761 per share, an upside of 2% over the CMP. Accordingly, we reiterate our HOLD rating.
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