InvestorQ : What is the outlook for Infosys in the light of the recent results?
Sam Eswaran made post

What is the outlook for Infosys in the light of the recent results?

Answer
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swati Bakhda answered.
1 year ago


Infosys has given growth of around 11% in profits but on a comparative basis it is much lower than TCS. Also the operating margins are closer to 21% and that has been gradually under pressure compared to the OPMs of over 25% for TCS. While TCS does not give forward looking guidance, the guidance given by Infosys this quarter was fairly disappointing. Additionally, the company has recently adopted a strategy of growth at all costs under the new CEO, Salil Parekh. This had led to erosion of operating and net margins for the stock. While Infosys is building its top line and business traction, the big challenge remains the attrition rate. For example, while TCS has attrition rate of just about 11%, Infosys has an attrition rate of over 18%. That is working against price traction for Infosys. The advantage for Infosys is that its P/E ratio of 22 times historical earnings gives it a valuation comfort. Investors can look at Infosys considering its valuations and also because it has gotten over the top management and corporate governance challenges of the last few years.