Infosys after opening lower recovered sharply in morning trade itself, rallying nearly 5.7 percent to hit a fresh record high of Rs 1,384.40 on Monday after the company announced bonus share issue, though earnings were mixed.
The stock price was quoting at Rs 1,382.50, up Rs 73.40, or 5.61 percent on the BSE at 10:10 hours IST.
The software services exporter started off the year 2018-19 on a mixed note as Q1 bottomline and operational numbers missed analyst estimates while revenue and FY19 guidance met expectations.
Profit for the quarter ended June 2018 degrew by 2.11 percent sequentially to Rs 3,612 crore, which was partly hit by reduction in the fair value of disposal group held for sale in respect of Panaya.
Revenue from operations in Q1grew by 5.77 percent to Rs 19,128 crore and revenue in dollar terms increased 0.92 percent sequentially to $2,831 million while constant currency revenue growth was 2.3 percent QoQ.
Analysts polled by Reuters on an average expected Infosys to post revenue at Rs 19,093.4 crore, and profit of Rs 3,747.6 crore in the June quarter.
Infosys has maintained its FY19 constant currency revenue growth guidance at 6-8 percent and operating profit margin at 22-24 percent.
EBIT (earnings before interest and tax) rose 1.5 percent sequentially to Rs 4,537 crore but margin contracted 100 basis points to 23.7 percent for the quarter ended June.
To celebrate the 25th year of the company’s public listing in India and to further increase the liquidity of its shares, Infosys announced a bonus issue of one equity share for every equity share held.
Majority of brokerage houses remained positive on the stock, expecting 9-19 percent return over a period of one year on hopes of better margins going ahead. They feels the stock price is going to get support from bonus share issue announcement.
Jefferies | Rating - Overweight | Target - Rs 1,450 | Return - 11%
Infosys reported mixed results in Q1FY19 with srong US BFS commentary. "Revenue growth was marginally lower than we expected, but margin was in-line."
The company has positive commentary on demand outlook and a continued trajectory in large deal wins.
The research house said yield & valuation provid
ed support to the stock. "We have Overweight rating on the stock with a target price at Rs 1,450 per share."
Investec | Rating - Buy | Target - Rs 1,440 | Return - 10%
The revenue growth for Q1FY19 in constant currency (CC) was lower than expected 3 percent in CC. Large deal wins implied that Q3 could potentially be better than historic trends.
Its EPS estimates for FY19E / FY20E are higher by 3 percent / 3.8 percent, said while retaining Buy call on the stock with increased target price at Rs 1,440 (from Rs 1,320 earlier). "We assume a marginal narrowing of the valuation gap with TCS."
Commentary of no further investment taking advantage of weaker rupee added to the comfort, it said.
CLSA | Rating - Buy | Target - Rs 1,560 | Return - 19%
The Q1 was a soft quarter with firm outlook. The focus on digital helped on client relevance and the company has a strong capital return merit.
HSBC | Rating - Buy | Target - Rs 1,430 | Return - 9%
The Q1 was inline with good deal momentum and banking sector was surprisingly weak.
Infosys still expects pick up in coming quarters.
Motilal Oswal | Rating - Buy | Target - Rs 1,550 | Return - 18%
Motilal Oswal has maintained 'Buy' with a price target of Rs 1,550, saying June quarter’s constant currency revenue growth came in-line with estimate.
Strong growth was seen in energy and manufacturing on a yearly basis, though the company retained its guidance and expects better margins. "Deals and digital are positives but we are concerned on attrition and BFS sector."
Infosys will achieve the lower end of its guidance in 2018-19, it feels.
Prabhudas Lilladher | Rating - Buy | Target - Rs 1,430 | Return - 9%
Owing to cross currency headwinds and Q1 USD revenue miss, Prabhudas trimmed USD revenue growth assumptions to 7.2/8.5 percent for FY19/FY20E (versus 8.4/8.5 percent modelled earlier)).
We expect Infosys USD revenues to grow 7.2 percent in FY19 (versus 9.8 percent USD revenue growth modelled for TCS). TCS' strong deal signing over the past six months coupled with multiple Insurance platform deal wins (which we believe have been won owing to TCS' early investments in these areas) has given it an edge over Infosys for FY19.
TCS stronger momentum in BFSI vertical in Q1FY19 (versus tepid momentum for Infosys in this vertical) is also leading to the growth differential.
Modest USD revenue downgrade is negated by USD versus INR reset to lower levels. Hence, retain EPS estimates at Rs 71/79.3/share for FY19/FY20E EPS. Infosys trades at 16.7x FY20E EPS which is at 28 percent discount to TCS. The target price is raised by 3 percent to Rs 1430/sh (18x FY20E EPS vs 17.5x FY20 EPS earlier).
Nomura | Rating - Reduce | Target - Rs 1,130 | Return - (14%)
Results were a tad lower than consensus on growth/margins. Unchanged FY19 revenue growth & margin guidance were on expected lines.
We maintained reduce rating with target at Rs 1,130 per share.
Citi | Rating - Neutral | Target - Rs 1,315 | Return - 0%
Citi has maintained 'Neutral' with increased target price at Rs 1,315 from Rs 1,285 as Q1 was largely inline in revenues and EBIT margins.
Flattish BFSI and high attrition are key concerns.
The stock will be supported by sector sentiments, pending capital return and bonus announcement.
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