IBEF: October 16, 2020
On Thursday, Infosys Ltd became the fifth Indian company to top Rs. 5 trillion (~US$ 68 billion) in market capitalization, with the stock touching almost 61% this year so far. It is the nation's second IT company to have achieved the milestone.
The stock today hit a new record high of about 1,185% on the BSE, up 4.3% from its previous close, raising its market cap to about Rs. 5.04 trillion (~US$ 68 billion) after the company's better-than - expected earnings for the September quarter.
Infosys also increased its estimates for annual revenue growth on the continued strength of digital services operations.
Currently, with a market capitalisation of around Rs. 15.43 trillion (US$ 210 billion), Reliance Industries is India's most valued business, followed by TCS and HDFC Bank at around Rs. 10.42 trillion (US$ 140 billion) and Rs. 6.62 trillion (US$ 90.30 billion), respectively.
From the previous 0-2% in constant currency terms, Infosys raised its revenue growth guidance to 2-3% for the year to 31 March and issued margin guidance of 23-24% against 21-23% earlier.
Motilal Oswal in a report to its investors, said, "Upward revision to FY21 guidance with revenue growth is positive but still conservative.” The report added, “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".
For the year, its profit rose 20.5% from a year earlier to Rs. 4,845 crore (US$ 660.91 million). Revenue increased to ~ Rs. 24,570 crore (US$ 3.35 billion) by 8.6%. Dollar revenue grew 3.2% year-on-year and 6.1% sequentially to $3.31 billion on the back of $3.15 billion worth of big deal wins. Operating margin increased from 22.7% in the previous three months to 25.4%.
Antique Broking in its report to its investors said, "We remain constructive on Infosys in the medium to long term with its ability to engage with large clients for their large transformation programs; we expect Infosys medium to long term growth to be like TCS and expect payout ratio to improve gradually, reaching similar payout ratio of TCS in 3-5 years. We increase Infosys valuation multiple to 24x (from 23x earlier) forward PE on FY23e EPS which is line with our valuation multiple of TCS. We expect TCS and Infosys long term growth rate to be like TCS".
The brokerage has increased its stock target price to Rs. 1,280 (US$ 17.46) per share from Rs. 1,150 (US$ 15.69).
Of the 47 brokers monitoring Bloomberg's Infosys stock, 41 have suggested a "buy" price, two have a "sell" on the stock, and four have a "hold" price.
After Infosys' September quarter results, several brokerage firms increased their target price on the scrip. Motilal Oswal repeated Buy and lifted its target price by 19% to Rs. 1,355 (US$ 18.48) a share, Emkay raised its target price to Rs. 1,360 from 1,137 a share, Elara retained Buy with a higher target price of Rs. 1,325 (US$ 18.07) a share, BoB Cap retained the ADD ranking from Rs. 1,020 (US$ 13.91) a share to Rs. 1,210 (US$ 16.51) with a target price.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.