Infosys shares were trading marginally higher on Friday at Rs 1,484 on NSE after the company reported a 13.4% rise in its consolidated net profit for the quarter ended December 2022 at Rs 6,586 crore on January 12. The company’s consolidated revenue from operations increased 20.2% to Rs 38,318 crore against Rs 31,867 crore in the corresponding quarter last year. The total contract value for the quarter was the strongest in the last eight quarters at $3.3 billion, the IT firm said. Infosys share price has tumbled 2.6% so far this year, but the stock has gained over 2% in the last six months.
Infosys long-term growth outlook intact
“Infosys has delivered a good set of numbers for Q3FY23, with revenues and profits beating estimates. Deal wins was strong at $3.3 bn TCV, highest in the last eight quarters, also the high point of the quarter gone by was upgrade of revenues guidance to 16-16.5% vs 15-16% earlier and dropped in attrition rate. We believe the uncertain global macro environment will reflect in earnings volatility in FY24E and could restrict material outperformance in the near to medium term. Nevertheless, given Infosys’ strong track record and standing in the global IT arena, long-term growth outlook remains intact,” said Sanjeev Hota, Head of Research, Sharekhan by BNP Paribas.
Infosys’ upward revision of revenue guidance renews investors’ confidence
“Infosys has reported a good result. Though the margins have not expanded, the stability reflects the company’s cost optimisation measures. The weighty lowering of Attrition along with the upward revision of revenue guidance renews investors’ confidence in the business. Changes in the macroeconomic environment will bring clarity regarding company’s spending sentiments, and the last quarter of the fiscal year remains a crucial time to observe,” said Urmi Shah, Research Analyst, SAMCO Securities.
Should you buy, hold or sell Infosys shares?
Reliance Securities: Buy
According to the brokerage firm, Infosys reported a healthy 3QFY23 performance. “Margins were slightly below our expectations. Moreover, management raised its FY23 revenue growth guidance range from 15-16% to now 16-16.5%, and maintained its EBIT margin guidance to 21-22%, indicating better performance during the balance of FY23. Considering the industry-leading double-digit revenue growth, rising share of digital business (~63% of revenue), likely improvement in EBIT margin levels from current levels, declining attrition rate, and record high new TCV, we maintain our BUY recommendation on the stock,” it said.
Nuvama Institutional Equities: Buy
Analysts at Nuvama Institutional Equities maintain a positive stance on the IT sector. “We see strong sustainable demand (transformational/cost-takeout deals) driving revenue growth and margins tailwinds to aid higher earnings growth over the next three years. Valuation, being no longer expensive, makes the risk-reward profile attractive.” they said. The research firm has a buy call on Infosys stock with a target price of Rs 1,900 per share.
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