Infosys reported Q1 revenue growth of 2.2% q-o-q vs consensus expectation of 4.1%. Consequently, the full year guidance was cut to 10.5-12% (from 11.5-13.5% in cc). We did expect possible negative surprises in light of the uncertain macro environment. However, this sharp miss impacts our expectation of \u201cmarket leading\u201d growth for Infosys. In recent years we have talked of sector growth moderating to 8-10%, which is now further clouded by the Brexit headwinds. It is becoming evident that it may not be easy for Infosys to significantly outperform the sector, notwithstanding the company initiatives. Positively, the stock is now trading at 15x FY18e EPS, with limited downside risk to earnings making the risk-reward favourable. Worries from the Q1 results: (i) Offshore pricing is down 10% in the past few years. Though this may not be specific to Infosys, sector-wide trends are not helping. (ii) Guidance cut suggests a pick-up in the coming quarters is exposed to potential macro weakness. (iii) Attrition has again increased sharply in Q1FY17. This is surprising as the sector is slowing down. Attrition for competition is reducing as seen in TCS reporting a sharp improvement. (iv) Infosys growth in the Enterprise services business (SAP\/Oracle related work and consulting) has been lacklustre over the past six months. This is despite TCS and Accenture reporting strong growth in this business. This should be a strength for Infosys given that CEO Vishal Sikka was previously CTO at SAP. Positively, client metrics remain solid, as top-10 clients grew +4% q-o-q in Q1 The number of $100m customers also increased by 3 to 17. Total contract value (TCV) signed by the company improved further to $800m from $760m in Q4FY16 and $2800m in FY16. Also the miss in the quarter was largely concentrated in the Energy and Life Science and Package implementation\/consulting businesses, some of which may reverse in the coming quarters. Finally, the revised guidance still suggests a pick-up in growth in rest of the year that could be positive for the stock. TCS performance and commentary contrasted that of Infosys TCS performance in Enterprise services was significantly better than Infosys, while both reported muted growth in BFS. Telecom was strong for both, while sharp weakness in Energy and healthcare was specific to Infosys. Estimates\/Valuations We lower our FY17\/18e earnings estimates as well as our fair value-based TP (to R1,265) by 4-5%. We maintain a buy rating on the stock as valuations are now undemanding. Macro weakness is the key downside risk. As discussed earlier, we did expect a volatile quarter and possible negative surprises in light of the uncertain macro environment. However, the miss of Infosys is quite sharp and is not just macro, but due to company execution as well. Infosys revenues were impacted by headwinds in the consulting practice and package implementation business due to some project delays and ramp-downs. This mostly impacted the Energy, Healthcare and Life Sciences vertical. Ebit margins surprised positively by being down only 140bp q-o-q at 24.1%, versus our expectation of a 240bp q-o-q decline. Headwinds from wage hikes (c150bp), visa costs (c80bp) and currency depreciation were offset by operational efficiencies. Guidance cut The weak growth in the first quarter led to a downward revision in FY17e growth guidance to 10-11.5% y-o-y from 11.8-13.8% y-o-y. The company will need a CQGR of 2.9-3.8% to achieve its full-year guidance. It expects growth\u00a0in 2HFY17e to be better than the normal seasonality.