Infy’s Q308 Results are out: (all comparisons are year-on-year)
- Revenue up 17% to 4271 cr. (consolidated).
- Net profit is up 25% to 1231 cr. (from 980 cr.)
- EPS is up 22% to Rs. 21.54. This includes a one time tax reversal of 50 cr., without which the EPS would be 20.66, a 17% growth YoY.
- Guidance for FY08 (ending March 31, 2008) is an EPS of 81.
- The current price of Infy is 1600, which translates to a P/E of 20 or so.
- Not stellar results by any standards, but better than I expected. The EPS guidance is actually higher than I expected, at around 81 (versus some 79 as of last quarter) and earnings seem robust.
- Retention or hiring seems to have improved. Of 11,000 odd hires, they’re had a net addition of 8000 or so. The overall utilisation is less than 70%, a 1% drop (that’s about 880 employees really).
- BFSI forms 38% of revenues. A US recession will hit this sector the highest.
Results seem to show that Infy seems fairly valued at current prices. Even after falling 20% from the last results time it doesn’t seem like a value buy, on earnings. They have 7700 cr. in cash, and the only way they can really propel themselves up is to utilise it properly. They make about 150 cr. profit per quarter purely on interest from FDs, which amounts to nearly 1/8ths of their quarterly profit! I would rather that they use it in business and improve the return on that capital instead.
Also note: My earlier post on Infy’s option action being significant is of no value. The results are not spectacular on the upside or downside. This could just be result based buying, and the option writers would have made a killing.
Disclosure: No current positions.
