Infosys Ltd ADR (INFY): Strong Top-Line Growth From This Indian Tech Consultancy

Teradata Corporation (NYSE:TDC), an American competitor, recently delivered a fairly poor report as well. Q1 2013 EPS came in at $0.43, well under the $0.53 consensus. Revenue was down 3% in constant currency, and gross margin declined to 52% from 55.1% in the same period a year ago. According to management, the slow start to 2013 was expected, yet, the company now expects revenue and earnings at the lower end of previously given guidance.

Valuations and Metrics

Infosys Ltd ADR (NYSE:INFY) is trading at quite reasonable multiples compared to its industry peers and the broader market, with a P/E of 15.29 compared to Accenture Plc (NYSE:ACN)’s 16.91 and Teradata Corporation (NYSE:TDC)’s 24.7. The price-to-sales is a little high, though, at 3.45. On the other hand, the return on equity of 26.80% is quite good, and the operating margin of 25% is substantially higher than the industry average. The firm furthermore has an excellent balance sheet, with no debt and nearly $4 billion in cash.

The Bottom Line

As a leader in its industry, Infosys Ltd ADR (NYSE:INFY)’ latest earnings report shows that the company is able to maintain growth in a challenging macroeconomic environment. Revenue was up quite substantially, as strength in Big Data and Cloud Computing is paying off. With a reasonable valuation to boot, Infosys Ltd ADR (NYSE:INFY) looks like a compelling opportunity in the tech sector.

The article Strong Top-Line Growth From This Indian Tech Consultancy originally appeared on Fool.com and is written by Daniel James.

Daniel James has no position in any stocks mentioned. The Motley Fool recommends Accenture and Teradata. Daniel is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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