In Q1FY2011 the consolidated revenues of Infosys grew by 4.3% sequentially to Rs6,198 crore, which was in line with estimate of Rs6,213 crore. The US Dollar (USD)-term revenues grew strongly by 4.8% quarter on quarter (qoq) to USD1,358 million, ahead of the company's guidance of USD1,330-1,340 million. In constant currency, the revenues grew by 6% sequentially driven by the volume growth (up 7.6%), which was much ahead the Street's expectations. The realisation (in constant currency) declined by 0.6% sequentially.
The OPM declined by 236 basis points sequentially to 31.7% mainly on account of wage hike, negative cross currency impact, marginal rupee appreciation and a decline in the blended realisations. However, the negative impact of the same was partially offset by a higher utilisation level. Consequently, the operating profit also declined by 3% qoq to Rs1,962 crore.
In terms of the guidance for Q2FY2011, the dollar-term revenues are guided to be in the range of USD1,413-1,427 million (a 4.1% to 5.1% sequential growth). The earnings per share (EPS) are expected to increase by 5.4-7.4% sequentially to Rs27.42 to 27.95 per share.
For the full year FY2011, the revenue growth guidance (in dollar terms) has been revised to 19-21%, up from16-18% earlier. The earnings guidance has also been revised upward to 5.2-9.6% from 4.3-8.6% in dollar terms. In rupee terms, the EPS guidance has also been revised upward to Rs112.21-116.73 from the earlier guidance of Rs108-111.3. The upward revision in the revenue guidance hints towards a strong demand environment and also eases the concern regarding Europe but the revision in the earnings guidance was below the Street?s expectations. In terms of verticals, the company expects a strong demand growth from the banking, financial service and insurance (BFSI), energy and retail verticals.
At the current market price, the stock is trading at 22.8x its FY2011 and 19.5x its FY2012 earnings estimates.
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