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Infosys & HDFC will be announcing its third quarter financial results on Thursday, January 12. We have collated views of analysts on how they see earnings this time around. The same is as follows:
INFOSYS
Prabhudas Lilladher:
We expect Infosys to report a revenue growth of 13.7% in INR terms, with volume growth of 4.7% for Q3FY12, meeting their mid-range guidance in USD. We expect pricing improvement to remain muted on QoQ basis. We expect cross-currency to have negative impact of 1% QoQ. We expect the margins to expand by 263 bps for the quarter due to currency depreciation and cost absorption. We expect Infosys to revise guidance of 17-18% YoY growth in USD revenue for FY12.
Motilal Oswal:
We expect Infosys to increase 3QFY12 revenues 3.1% QoQ to USD 1.8 billion, lower than 3.2-5.4% guided band. Infosys guidance assumed 100 bps negative impact from cross currencies and 4.2-6.4% volume growth. Our 3.1% QoQ revenue growth factors in 90 bp negative impact from cross currencies and 4% QoQ volume growth. However, in INR terms, we expect 12.2% QoQ revenue growth to ` 90.9 billion on the back of 8.9% QoQ rupee depreciation. We expect EBIT margin at 30.8%, +260 bp QoQ primarily due to favorable currency. We expect other income at ` 3.45 billion, after including INR 600m forex loss. We expect EPS at ` 39.3, up 17.8% QoQ and higher than company’s top-end guidance (` 38.5-39.2). We expect Infosys to guide 1.5-2.5% QoQ USD revenue growth in next quarter, resulting in lower full-year USD revenue growth guidance to 16.6-16.9%. However, EPS guidance may remain unchanged due to favorable currency.
Key things to watch out for: (a) 4Q guidance, and (b) Commentary on sales cycle and client budgets. The stock trades at 19.3x FY12E and 17.1x FY13E earnings. Maintain Buy, with a target price of ` 3,225, based on 20x FY13E earnings.
Emkay Global Services:
We expect Infosys to report a 3.7% QoQ USD rev growth impacted adversely by 60 bps cross currency movements. Margins estimated to improve by 250 bps QoQ to 33.6% aided by growth leverage and lower currency. Profits estimated to increase by 25% QoQ to ` 23.8 bn aided by strong performance. Key things to watch out for (1) outlook on CY12 IT spends; (2) reset in FY12 revenue guidance to 17-17.5% YoY growth and (3) March ’12 qtr revenue outlook (we expect a 2-3% QoQ growth guidance).
For more: MONEYCONTROL SITE
HDFC
Prabhudas Lilladher:
We expect a usual quarter for HDFC limited with stable margins. We expect 4% sequential loan growth (21% YoY growth). Impact of no pre-payment penalty and higher standard provisions on the retail loan book would be negligible. Reported PAT growth is expected to be 12% YoY, mainly due to large investment gains booked in Q3FY11, adjusted for which we expect PAT growth of 22% YoY.
Motilal Oswal:
We expect HDFC’s loan growth to remain healthy at 22% YoY. Spread would remain largely stable at 2.3% QoQ. Traction in fee income is likely to continue. However, lower investment gains are likely to result in other income being flat YoY. We model in investment gains of ` 950 million against ` 1.7 billion in 3QFY11. Dividend income is likely to remain high at ` 650 million. Asset quality has remained healthy over the last several quarters and the trend is likely to continue. In 2QFY12, GNPA was at 0.82% on 90 days overdue basis and 0.53% on 180 days overdue basis. While we expect asset quality to remain stable, on a conservative basis we have built in higher provisioning expense. We expect PAT growth to moderate to 10% YoY (on a higher base). The stock trades at 4.3x FY13E ABV and 14.1x FY13E EPS (price adjusted for value of other businesses and book value adjusted for investments made in those businesses). Maintain Neutral. Key things to watch for: (1) Movement of spreads, (2) Loan growth.
INFOSYS
Prabhudas Lilladher:
We expect Infosys to report a revenue growth of 13.7% in INR terms, with volume growth of 4.7% for Q3FY12, meeting their mid-range guidance in USD. We expect pricing improvement to remain muted on QoQ basis. We expect cross-currency to have negative impact of 1% QoQ. We expect the margins to expand by 263 bps for the quarter due to currency depreciation and cost absorption. We expect Infosys to revise guidance of 17-18% YoY growth in USD revenue for FY12.
Motilal Oswal:
We expect Infosys to increase 3QFY12 revenues 3.1% QoQ to USD 1.8 billion, lower than 3.2-5.4% guided band. Infosys guidance assumed 100 bps negative impact from cross currencies and 4.2-6.4% volume growth. Our 3.1% QoQ revenue growth factors in 90 bp negative impact from cross currencies and 4% QoQ volume growth. However, in INR terms, we expect 12.2% QoQ revenue growth to ` 90.9 billion on the back of 8.9% QoQ rupee depreciation. We expect EBIT margin at 30.8%, +260 bp QoQ primarily due to favorable currency. We expect other income at ` 3.45 billion, after including INR 600m forex loss. We expect EPS at ` 39.3, up 17.8% QoQ and higher than company’s top-end guidance (` 38.5-39.2). We expect Infosys to guide 1.5-2.5% QoQ USD revenue growth in next quarter, resulting in lower full-year USD revenue growth guidance to 16.6-16.9%. However, EPS guidance may remain unchanged due to favorable currency.
Key things to watch out for: (a) 4Q guidance, and (b) Commentary on sales cycle and client budgets. The stock trades at 19.3x FY12E and 17.1x FY13E earnings. Maintain Buy, with a target price of ` 3,225, based on 20x FY13E earnings.
Emkay Global Services:
We expect Infosys to report a 3.7% QoQ USD rev growth impacted adversely by 60 bps cross currency movements. Margins estimated to improve by 250 bps QoQ to 33.6% aided by growth leverage and lower currency. Profits estimated to increase by 25% QoQ to ` 23.8 bn aided by strong performance. Key things to watch out for (1) outlook on CY12 IT spends; (2) reset in FY12 revenue guidance to 17-17.5% YoY growth and (3) March ’12 qtr revenue outlook (we expect a 2-3% QoQ growth guidance).
For more: MONEYCONTROL SITE
HDFC
Prabhudas Lilladher:
We expect a usual quarter for HDFC limited with stable margins. We expect 4% sequential loan growth (21% YoY growth). Impact of no pre-payment penalty and higher standard provisions on the retail loan book would be negligible. Reported PAT growth is expected to be 12% YoY, mainly due to large investment gains booked in Q3FY11, adjusted for which we expect PAT growth of 22% YoY.
Motilal Oswal:
We expect HDFC’s loan growth to remain healthy at 22% YoY. Spread would remain largely stable at 2.3% QoQ. Traction in fee income is likely to continue. However, lower investment gains are likely to result in other income being flat YoY. We model in investment gains of ` 950 million against ` 1.7 billion in 3QFY11. Dividend income is likely to remain high at ` 650 million. Asset quality has remained healthy over the last several quarters and the trend is likely to continue. In 2QFY12, GNPA was at 0.82% on 90 days overdue basis and 0.53% on 180 days overdue basis. While we expect asset quality to remain stable, on a conservative basis we have built in higher provisioning expense. We expect PAT growth to moderate to 10% YoY (on a higher base). The stock trades at 4.3x FY13E ABV and 14.1x FY13E EPS (price adjusted for value of other businesses and book value adjusted for investments made in those businesses). Maintain Neutral. Key things to watch for: (1) Movement of spreads, (2) Loan growth.
