Shares of India's IT major surged in trade on Tuesday, continuing its rally after robust Q1 results in the April-June period. We take a look at what brokerages have to say.
Shares of India’s IT major surged in trade on Tuesday, continuing its rally after robust Q1 results in the April-June period. Infosys share price gained more than 2.4% to hit an intra-day high of Rs 804.25 on BSE this morning. The shares have gained more than 10.5% since its Q1 results on July 12th. The rise in shares come after Infosys reported Q1 results in-line with estimates as net profit came in at Rs 3,802 crore; implying a 5.3% jump on-year. Infosys has reported a strong revenue growth of 14% to Rs 21,803 crore. On a quarterly basis, the revenue registered a jump of 1.2%.
Taking stock of the reported results, revenue growth brokerage firm Motilal Oswal said that guidance upgrade to 8.5-10% on-year in CC terms v/s 7.5-9.5% earlier, and change in payout policy to pay 85% of free cash flows as against 70% earlier, adding to the stock’s attractiveness. Motilal Oswal has a buy rating on the shares with a target stock price of Rs 840, implying an upside of 15% from the current market prices. “We note the contrast in Infosys’ 1QFY20 performance to that of TCS – where near-term revenue visibility remained suspect and the growth performance was lopsided in favor of two verticals,” said Motilal Oswal, adding that the case for narrowing of the valuation gap between the two gets stronger.
ICICI Securities has maintained an add rating on the shares with a revised target price of Rs 785 per share from the earlier target price of Rs 780 per share based on 19x FY21E EPS (earning per share). Weaker than expected execution in margins, lower than expected total contract value of deal wins, weakness in discretionary spends and the currency appreciation are the key risks, ICICI Securities said in a report.
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