Infosys beats Q1 estimates, raises FY18 growth view

July 19, 2017
Infosys beats Q1 estimates, raises FY18 growth view August 17, 2018 Clive Nelson

On the last day of June, India’s second largest software technology company Infosys Ltd (NYSE: INFY) reported its results for the first-quarter ended June. At a time when Gartner has cautioned a decline in software spending across the globe, Infy reported better than anticipated first-quarter earnings.

Additionally, the company has also raised its outlook for fiscal 2017-2018. On the basis of facts provided underneath, we anticipate a rally in the stock of Infosys, which closed at $15.55 yesterday.

The Bengaluru-India based company reported an increase in the first-quarter revenues to $2.651 billion, from $2.501 billion reported in the same period last year.

The net profit for the quarter ended June 2017 was $541 million, compared with $511 million (Rs.3,483 crores) in the year-ago period. The earnings estimates of Thomson Reuters analysts were Rs. 3,439 crores. On a per share basis, earnings increased to $0.24 in the recent quarter, from $0.22 per share in Q1 2016-2017. The operating margin for the first quarter was 24.1%.


North American revenue, which accounts for about 60% of the overall company’s revenue, grew 1.3% sequentially. In the first-quarter, the employee count of the company declined by 1,800 to 1,98,553. However, Infosys anticipates the employee count to increase by 13,000 in FY18. Looking ahead, in the financial year 2017-18, the company continues to expect a revenue growth of 6.5% to 8.5% in constant currency terms.

Infosys also raised its dollar growth guidance by 1% to 7.1%-9.1%, from 6.1%-8.1% issued in April. However, revenue in local currency is expected to grow at a lower rate of 3% to 5%. Infosys also maintained its operating margin outlook range of 23% to 25%. Notably, Infosys reported growth of 8.3% and 15.3% in FY17 and FY16, respectively.

Cash and cash equivalents at the end of first-quarter was $6.091 billion, compared with $5.979 billion at the end of the previous quarter. Morgan Stanley stated that the company’s operating margin has surpassed estimates and appreciated the performance of the company in the first-quarter. Thus, revenue growth coupled with a raise in FY18 estimates is expected to keep the stock of Infosys in a bullish orbit.

The stock is in an uptrend as shown in the image below. Additionally, the stochastic oscillator is rising. Furthermore, a strong support exists at 15. Thus, we can expect the uptrend to continue in the days ahead.

Infosys Stock Price: July 19th 2017

Infosys Stock Price: July 19th 2017

To gain from the forecasted upswing of the stock, we may purchase a call option valid until July 27th . A strike price of about $15.50 is preferred for the trade.

About the Author

Clive Nelson

Clive Nelson Author

Hi, my name is Clive Nelson and welcome to Traders Bible. Just to tell you bit about myself…I have been trading FX and binary options for the best part of 10 years now. After graduating with honours in economics, I began working for an investment bank in New York as an assistant trader before working my way up. After a few years, I went on to work as a broker in London, England and then eventually came back to the U.S to work in a hedge fund, where I manage $800 million of my clients’ investments. There have been times over the course of my career where I’ve had to take a hit, but I’ve accepted that losing is part of the game, it’s a learning curve. I’ve learnt from my mistakes and you don’t have to make the same errors I did. A lot of my education came from when I was a broker and this is why I’m here to tell you that Traders’ Bible offers you the foundations of how to become a great trader.

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