Financials

The company reported revenues of Rs 17,078 crores for the quarter ending June 30, 2017, which was more or less in line with estimates. The net profits of the company came in at Rs 3,483 crores, which was slightly above expectations. The Earnings Before Interest and Tax (EBIT) margins, which came in at 24.1 per cent, was above street estimates of around 23 per cent margins. The EBIT for the quarter was at Rs 4,111 crore, which was marginally better.

Guidance: A major positive

The guidance of the company was also pretty decent, especially the dollar revenue guidance. In fact, the company has upped the dollar revenue guidance to a band of 7.1% to 9.1% from 6.1% to 8.1%. The constant currency guidance has been maintained at 6.5% to 8.5%. It hints at greater revenue visibility in the coming quarters.

Management commentary buoyant

The management commentary at least sounded optimistic amidst all the gloom that we are seeing for the IT sector. "Our persistent focus on execution in Q1 is reflected in broad-based performance on multiple fronts-revenue growth, resilient margins despite multiple headwinds, healthy cash generation and overall business results. I am encouraged by the uptick in revenue per employee for six quarters in a row, and the strong momentum in our new high growth services and software, as we accelerate our focus on innovation-led growth," said Dr. Vishal Sikka, CEO.

What to do with the Infosys stock?

With the Nifty approaching a record 10,000 points it makes little sense to buy into stocks that are showing just 6 to 7 per cent annual growth. While the stock is up 1 per cent today, investors who have been fed-up with the under performance of the stock vis-a-vis the Sensex performance this year, may want to sell. At Rs 986, the stock maybe a good sell on rally opportunity.