Infosys came out with its Q2 and half yearly results this morning. Revenues grew by 10% on YoY basis and 3.05% on QoQ basis to Rs 18,070 crore. Earnings before taxes stand at Rs 5,066 crore, up by 5.87% on YoY basis and 5.59% on QoQ basis. Net profits stood at Rs 3,606 crore up by 6.12% on YoY basis and 4.95% on QoQ basis.

Half yearly report card looks like this:

Infosys 1H – 2017 % 1H – 2016 % % Difference
Revenues 35,604 100% 31,538 100% 12.89%
EBT 9,863 27.70% 8,989 28.50% 9.72%
Net Profits 7,041 19.78% 6,427 20.38% 9.55%


Revenue split by business segment for Infosys looks like this:

Infosys 1H – 2017 1H – 2016 % Difference
Financial Services 9,237 8,125 13.69%
Manufacturing 3,696 3,444 7.32%
Energy & Utilities & Communications 7,583 6,502 16.63%
Retail, consumer packaged goods & Logistics 5,694 4,923 15.66%
Life Science, Healthcare & Insurance 4,093 3,906 4.79%
Hi-Tech 2,661 2,365 12.52%
Others 1,127 724 55.66%


Infosys is struggling to grow its business in the Manufacturing & Life science, Healthcare and insurance sector. Both of those segment generate almost 22% of their revenues.

The consensus of the analysts are expecting its earnings to grow by only 6% in 2017 financial year. So far Infosys is beating the earnings growth forecast by analysts. However, they had come out and said that for the remaining half year they do not expect their revenues to grow beyond 10%. This will impact negatively to its 2nd half earnings for 2017. We calculated its intrinsic value band for the 2017 financial year on the basis of these forecast to be Rs 624 – Rs 764 per share. These calculations had factored in its dividend payout ratio of 35% so far this financial year.

Aziz Dodhiya is the chief investment officer for the Valueoperations funds which operates in the Indian market as an FPI (Foreign Portfolio Investor). We do not offer any personal advice to buy or sell any stocks and the views that are shared by Aziz might not incline to your personal investment strategy and this is the reason we advise you to take professional advice before going ahead with our views.