Few more quarters to evaluate Infosys' new strategy: Jagannadham Thunuguntla

Interview with Head of Research, SMC Global Securities

Jagannadham Thunuguntla, Head of Research, SMC Global Securities shares his view with Tulemino Antao post third quarter earnings from Infosys

What is your reading on Infosys' third quarter earnings?

The earnings have proved to be good for Infosys in a quarter which is seasonally weak for the IT sector. Further, Mr Vishal Sikka's confidence of margin maintenance and robust pipeline going forward augurs well for the company going forward.

This is the first full quarter by the new management headed by Mr Vishal Sikka. Is the 'Renew & New' strategy playing out for Infosys?

As of now, the strategy seem to have started working to some extent. However, it is too early to say and the performance in the next few quarters will give a clear understanding how the management is implementing the new strategy.

The management has decided to remain conservative as always and maintained guidance for FY15 at 7-9%. What is your take on the same?

The company continues to remain conservative in its guidance and most importantly it has not lowered the upper-end of the guidance which is good. Further, the dollar revenue guidance is based on constant currenct currency terms which is encouraging.

What are your views as attrition rate during the quarter was marginally higher at 20.4% compared to 20.1% in the second quarter?

Attrition rates have been a concern for quiet some time for the company following the transition to the new management amid top level exits. However, the management is confident of bring down the attrition rate going forward.

What is your advice on the stock for new investors who wish to invest for a 1-2 year period?

Probably, they can use the dips to buy the stock and accumulate the stock in a staggered manner.

Any disclosures you wish to share?

I have no personal holdings in Infosys but it is safe to assume the same has been advised to clients.