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Last Updated : Jul 15, 2019 10:37 AM IST | Source: Moneycontrol.com

Brokerages raise target price on Infosys post Q1 results; Citi upgrades to buy

The most aggressive target price on Infosys was put out by Citigroup at Rs 820 that translates into an upside of little over 12 percent from July 12 closing

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Global brokerage firms maintained their rating but raised their 12-month target price on Infosys post June quarter results. The IT major reported 5.2 percent YoY growth in consolidated net profit to Rs 3,802 crore for the quarter ended 30 June 2019.

Revenue from operations of the Bengaluru-based firm grew 13.9 percent to Rs 21,803 crore in the June 2019 quarter, as compared to Rs 19,128 crore in the year-ago period, it added.

Infosys has increased its revenue growth guidance for FY20 to 8.5-10 percent in constant currency. In April quarter, Infosys had said it expects revenue growth of 7.5-9.5 percent in FY 2019-20.

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In terms of performance, Infosys has risen more than 12 percent so far in 2019 while in the past one year the gains are about 16 percent. If someone is planning fresh investments there is still some more room for the stock.

The most aggressive target price on Infosys was put out by Citigroup at Rs 820 that translates into an upside of little over 12 percent from July 12 closing of Rs 727.10 on the BSE. The brokerage also upgraded the stock to buy saying as the risk-to-reward ratio is still favourable for investors.

The EBIT is largely in-line with estimates. Deal wins, as well as revenue guidance being raised, is also positive for the stock. Attrition remains elevated in the June quarter.

The stock is on track to get re-rated and the discount to TCS will narrow. “The EPS numbers remain unchanged but we raise our multiple to 21x from 20x relative preference over TCS remains unchanged,” said the Citi note.

Another global investment bank, HSBC maintained its hold rating on Infosys but raised its 12-month target price to Rs 780 from Rs 760 per share.

The IT major raised its guidance offsetting the cyclical slowdown that is a positive sign driven by deal wins. The near-term margin is at risk as large deals ramp up to see further consensus downward revisions, HSBC said.

The guidance revision alludes the company’s confidence in its pipeline and large deal wins. The deal wins of $2.7 bn were strong, said the note.

A domestic brokerage firm, Kotak Institutional Equities also raised target price to Rs 775 from Rs 750. But, the margin performance could have been better and it could improve going forward.

The attrition rate management continues to disappoint, but the overall performance was solid, said the note.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Jul 15, 2019 10:37 am
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