Infosys’ numbers for 2QFY2017 have come in higher than our expectations. Its revenue posted a 3.5% sequential growth to US$2,587mn (V/s US$2,561mn expected). In constant currency terms (CC), the sales grew by 3.9% qoq, while the volume grew by 4.0% (1QFY2017 qoq growth was 2.2%). On the operating margin front, the EBIT margins grew by 78bp qoq to 24.9% (V/s 24.5% expected) on back of the high volume growth. Consequently, the PAT grew by 4.9% qoq to Rs3,606cr (V/s Rs3,546cr expected). The company downgraded the guidance to 8-9% CC growth from earlier 10.5-12.0% CC growth. We maintain our Buy rating on the stock with a target price of Rs1,249.

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