Infosys stock to rise 5-7% post Q2 earnings: IIFL

IT giant Infosys will kick start second quarter earnings on Friday. IT analyst Aniruddha Mehta of India Infoline expects the company to meet expectation. He sees a positive uptick of around 5-7 percent in the stock post earnings.

IIFL expects the company to post 13 percent profit expansion to Rs 2700 crore and revenue growth of 2.6 percent in dollar terms quarter-on-quarter. Also read: Krishna Kumar Karwa positive on Infosys Below is the verbatim transcript of his interview on CNBC-TV18 Q: What are you all going with at all for tomorrow, what are you expecting by way of earnings growth and more importantly guidance from Infosys ? A: Q2 is basically a strong quarter for Indian IT and this time too we expect it to be better. For Infosys, we expect the revenues to grow at 2.6 percent quarter-on-quarter in dollar terms and margins, we are expecting it to expand because there are huge tailwinds of the rupee depreciation and hence there would be a margin expansion of around 70-80 bps. On the profit front, we expect the profits to expand around 13 percent quarter on quarter to Rs 2700 crore. We believe there would be an increase in the guidance to 8-11 percent from the current 6-10 percent, especially considering the improvement in external demand environment.. Q: There are some hopes of a special dividend because they would get into the USD 2 billion mark, any such hopes built into the stock you think? A: I don't think so. We would look forward to it but at this point of time I don't believe that is the case. Q: How do you think the stock has reacted, the market is equally divided between those who believe that there could be a volatile move tomorrow and those who believe it is going to be flat, which camp are you in? A: Over the last three months, the stock has not gone up as much as the large caps have gone up. Since, we expect the company to come out with numbers in line with expectations; there would be a directionally positive move. We see a reasonably positive uptick around 5-7 percent. Overall, it is really difficult to put a finger on how the stock would behave tomorrow considering the performance in last four-five quarters. So directionally it should be positive.