Shares of Information Technology (IT) giant Infosys opened nearly 4% higher on Thursday but soon erased all gains traded flat at Rs 1,130 per share.
Shares of Information Technology (IT) giant Infosys opened nearly 4% higher on Thursday but soon erased all gains traded flat at Rs 1,130 per share. In the July-September quarter, Infosys posted a 20.5% on-year rise in net profit to Rs 4,845 crore. The surge in profits was aided by large deals that helped revenue jump 8.6% on year to Rs 24,570 crore. Infosys said that its digital and cloud capabilities combined with intense client relevance is helping it achieve differentiated results. Overall revenue growth was at 2.2% on year and 25.4% growth was registered in the digital offerings.
During the quarter, Infosys saw large deal wins worth $3.15 billion. New deals accounted for 84% of total deals in the second quarter of this fiscal year. Infosys signed 16 large deals during the quarter, of which 11 are from Americas and four from Europe. “We believe the current technology wave is the biggest in the sector’s history and consensus & companies will keep upgrading numbers & guidance hereon,” said brokerage and research firm Edelweiss Securities. The brokerage has a ‘Buy’ call on the scrip with a target price of Rs 1,180 per share backed by improving numbers.
Helped by the strong numbers during the quarter, Infosys has revised its outlook for the fiscal. Going forward the IT major expects revenues this year, in constant currency, will go up by 2-3% rather than the estimated 0-2%. “Increase in revenue and margin outlook for FY 21 is due to the continued trust clients have in us. I am extremely proud of our team for achieving these results in challenging business conditions globally,” said Salil Parekh, CEO and MD, Infosys. Infosys will roll out salary hikes and promotions for employees across all levels effective January 1.
“We expect Infosys to lead the tier-I IT segment on organic revenue growth,” said ICICI Securities in a note. Analysts at ICICI Securities said that over the financial year 2018 to 2020, EBIT margins contracted ~300bps to 21.3%, which was led by planned catch-up in investments, attrition interventions, and large deal ramp-ups. “As these investments normalise and back-ended productivity benefits kick in, we expect EBIT margins to bounce back by FY22E,” ICICI Securities said in a post-result note while pinning a target price of Rs 1,400 per share on the IT stock.