Infosys Beats Expectations

Infosys on 12 th july posted yet another stellar quarter of growth well above the earning guidelines provided by the company. The revenues of the company grew by 14.9% and the profits grew by 18.9%. The only disappointment was the operating margin of below 30%. The hike in the salaries for employees and higher cost for visa were the main reasons for the decline of the operating margin by 4.6%. The depreciation of rupees helped improve the Operating margin by 2.2%.

Another main highlight of this quarter was the increase in the other incomes by 77.8% quarter over quarter. The gains from exchange rate stood at Rs. 530 millions compared against the loss of 10 million last quarter.

The future outlook of Infosys looks very good with expected revenues next year between Rs. 134-135 billion reflecting a year over year growth of 41%-42% and a EPS guidance of around Rs. 124 –Rs. 126 reflecting 38% to 40% growth.

Infosys has a EPS of Rs. 90.65 compared to Rs. 57.65 of Tata Consultancy Services. Also Infosys offers a dividend per share of around Rs. 45. vs. Rs. 13.5 of TCS. The book value of Infy around Rs. 250 is also higher compared to Rs. 140 of TCS (last year’s estimates). This makes Infosys a fundamentally strong company for long to medium term investment.