In conversation with Jinsy Mathew, Dipen Shah, senior vice president and head of private client group research, Kotak Securities shares his first take on the Infy numbers
What is your reaction to the Infosys numbers?
The initial reaction is positive, as revenue and margins in the recently concluded quarter were higher-than-expected. Also, Infosys has improved efficiency levels despite adding a higher number of employees, which we consider as a positive. The company has maintained its guidance and that was along expected lines.
FY15 dollar revenue guidance has been maintained between 7-9%, which is much below the revue guidance of the industry. How do you interpret this announcement?
Though the guidance is lower than industry, this is something which was already known as the company is in restructuring mode. We expect the growth rate to be relatively better going ahead. We will be looking forward to their strategic vision for the company.
Is the current set of numbers a margin expansion story or a demand improvement story?
It’s a mix of both. There is margin improvement but in the future going ahead we believe there should also be a revenue growth expansion which should help the company.
Has the result raised the bar of expectations from the other companies in this sector?
Yes, without a doubt. It’s a good start from Infosys and others will be expected to continue the good run.
If one were to extrapolate this performance, do you see the gap between Infosys and TCS coming down in the near future?
If the management is able to improve the growth rate in the next year then the gap is bound to reduce. We will have to wait and see how the growth story pans out for Infosys.
IT stocks have gained in today’s trade across the large and midcaps. Would you be a buyer in midcaps or large caps now?
We are stock specific. We like some of the large and mid – cap stories.