Infosys, which received a setback due to the recent cancellation of RBS contract is on its way towards achieving its strategic initiatives and there are early indicators of success, Prabhudas Leeladhar has said in a report after an analyst meet with the company. The company might update its guidance along with Q2FY17 results.
The company told analysts that Q2FY17 would be better than Q1. “Management
outlined that Q2FY17 growth will be better than Q1FY17 (1.7% QoQ) on constant currency). Challenges faced in Q1FY17 have been addressed,” the report said.
Other than the setback due to cancellation of the RBS contract, Infosys has met headwinds due to Brexit.
However, the Company has also witnessed strength in India business and large deals. “Management wants to evaluate full impact of all these factors and intends to update the guidance along with Q2FY17 results,” the report said.
The broking house has reiterated its ‘buy’ recommendation on the stock with a target price of Rs 1,400 based on 19x FY18 EPS. The stock was trading flat at Rs 1,020 intraday on BSE Sensex, with a day’s high of Rs 1,021 and low of Rs 1011.80. The stock has a year’s high of Rs 1,228 on June 3, 2016.
Here are the Prabhudas Leeladhar’s key takeaways from the analyst meet”
- The entire endeavour of the company towards long term vision of 2020 will be achieved through three initiatives of strong revenue growth, margin improvement and high revenue per employee.
- Although the consulting business has been under some pressure, Infosys believes consulting will evolve into a 2‐tier model consisting of strategic conversations with clients and execution of larger projects.
- Long-term goal in consulting is to evolve it towards design thinking. Company intends to have strategic engagements with each of its top 250 clients over next 9‐12 months.
- Infosys is implementing Automation through the MANA platform. MANA is now live with 4 clients and there are several other engagements underway.
- MANA is essentially helping transforming and improving productivity. The MANA platform strategy evolves around three pillars: a) bringing MANA acrossplatforms, b) across managed services (ADM, IMS, testing etc), and c) pre-built solutions on platforms.
- ‘Zero Distance’ initiative now has 100 per cent coverage across all the projects (9,500).
- Company aims at delivery simplification through a) next gen global mobility, b) simplified vendor payments and claims, c) greater public cloud adoption, d) self‐healing systems.
- The company has been able to reduce overall cycle time by 45 per ent, simplified order creation & deal pricing, 30 per cent acceleration in global mobility and 20 per cent simplified vendor empanelment and faster vendor invoicing process.
- Infosys is renewing services by renewing culture (design thinking, Zero distance and Zero bench), automation (Machine learning, AI and MANA) and boundary-less thinking (industry utilities and modernization).
- The Company is also focused on increasing sales effectiveness. The key objectives for sales effectiveness are large deal wins, increasing top accounts and technology enabled sales.