Ever since reporting better-than-expected third quarter financial numbers on January 11, the stock price of Infosys, India’s second largest IT services exporter, has been on an upward curve; thus fuelling further expectations of another earnings beat when it announces its fourth quarter earnings next month.
The Infosys scrip, which never crossed the R2,600 level after October, 2012, got a real boost from the third quarter results announcement on January 11, 2013 and the stock rose by 17% on that day.
Since then, the company?s share have been trending higher and even crossed the R3,000 barrier on January 7.
With the fourth quarter results scheduled to be reported just a month later, expectations are rising that the company would be able to continue with the positive momentum built over the last couple of months.
?Definitely the stock got rerated after the Q3 results. Post the results, the stock has moved up over 30%. However, it is slightly an over reaction on just one quarter results. It should consistently deliver positive results for the next two to three quarters,? said Angel Broking IT analyst Ankita Somani.
The upside in the Infosys stock price puts the company back on the familiar territory of high-price movement among the IT stocks in India. The turnaround in fortunes has also got to do with the steady positive commentary given by the company on the overall business environment.
CLSA, a brokerage house in a recent note said, ?Revenue momentum looking better than anytime in 2012 – Infosys? commentary suggested that demand environment is not exactly buoyant but at least the volatility in client behaviour has reduced. Instances of delays in decision-making are much lower than 6-9 months back.?
?On the day of the results the stock went up by 17%, which shows that if there is a continuation of good performance and strong outlook for next fiscal, it will be a big boost for the stocks. For Infosys’ stock, strong guidance for FY14 is the single-biggest trigger,? said Sharekhan IT research assistant vice-president Sanjeev Hota.
For the fourth quarter ending March, Angel Broking expects Infosys to register a dollar revenue growth of 4% sequentially, which would be better than the first two quarters of the current fiscal.
According to Hota, the Bangalore-based IT firm registered a ?decent? volume growth in the last quarter and the shares will move higher if the company can continue with good volumes.
This upward movement in the stock prices has not been restricted to Infosys alone as its peers like TCS and Wipro has been showing rising trend in the price movement.
This positive momentum has been aided by the FY14 outlook.
?We expect continued outperformance via better-than-expected revenue growth in FY14,? said Morgan Stanley on the performance of the Indian IT companies for the forthcoming fiscal.