Highlights:
- Infosys Limited becomes India’s 5th firm to claim Rs 5 trillion m-Cap
- Infosys’ stock has surged almost 61% so far this year
- Company’s stock was trading at a record high of Rs 1,185 on BSE
Infosys Limited, on Thursday, became the 5th company in India to claim Rs 5 trillion market capitalisation as the company’s stocks having surged almost 61% in 2020 as for now.
Infosys is the 2nd Information Technology (IT) firm in India to have achieved such milestone, behind Tata Consultancy Services (TCS) Limited.
Today, Infosys’ stock was trading at a record high of Rs 1,185 on the Bombay Stock Exchange (BSE), which was up 4.3% from yesterday’s close heling the company push its m-Cap t Rs 5.04 trillion following the company’s better-than-expected September quarter earnings.
The IT firm also raised its annual revenue growth forecast on continued strength in digital services operations.
As of now, Reliance Industries is India’s most-valued firm with a market capitalisation of Rs 15.43 trillion, followed by TCS and HDFC Bank at Rs 10.42 trillion and Rs 6.62 trillion, respectively. At number 4 comes Hindustan Unilever Limited (HUL) at Rs 5.10 trillion.
“Infosys has raised its revenue growth guidance to 2-3% for the year to 31 March from the earlier 0-2% in constant currency terms and provided margin guidance of 23-24% versus 21-23% earlier,” a report said.
Motilal Oswal, in a report to investors, said, “Upward revision to FY21 guidance with revenue growth is positive but still conservative”, and added that “We expect Infosys to deliver above guidance in FY21 notwithstanding margin headwinds (wage hikes in 4Q, large deal ramp-up, seasonality, above margin factors, etc.) and based on strong deal wins”.
Infosys’ profit for the quarter rose 20.5% to Rs 4,845 crore from a year ago for the same period. The company’s revenue increased by 8.6% to Rs 24,570 crore. Dollar revenue grew 3.2% year-on-year and 6.1% sequentially to $ 3.31 billion on the back of large deal wins worth $ 3.15 billion.
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Infosys’ Operating margin surged by 2.7% to 25.4% from 22.7% in the last three months.
Antique Broking said, “We remain constructive on Infosys in the medium to long term with its ability to engage with large clients for their large transformation programs; we expect Infosys medium to long term growth to be similar to TCS and expect payout ratio to improve gradually, reaching similar payout ratio of TCS in 3-5 years.
We increase Infosys valuation multiple to 24x (from 23x earlier) forward PE on FY23e EPS which is line with our valuation multiple of TCS. We expect TCS and Infosys long term growth rate to be similar to TCS,” in its report to its investors.
The brokerage has raised its target price for Infosys’ stock to Rs 1,280 per share from Rs 1,150, an increase of 11.3%.
Out of the 47 brokers tracking the Infosys stock on Bloomberg, 41 have recommended a “buy” rating, while only two have a “sell” on the stock. The remaining four brokers have put a “hold” rating on Infosys’ stocks.
Many of the brokerage firms have also increased their target price on the scrip after Infosys’ September quarter earnings. Motilal Oswal has reiterated “Buy” and also increased its target price by 19% to Rs 1,355 a share for the firm, Emkay has also increased its target price to Rs 1,360 from 1,137 a share (an increase of over 19%), Elara has retained Buy with a higher target price of Rs 1,325 apiece, BoB Cap or Band of Baroda Capital Markets Ltd has retained “Add” rating with a target price to ₹1,210 from ₹1,020 a share which is an increase of 15.7%.
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