Shares of IT giant Infosys slipped as much as 4 percent in opening trade on October 18, a day after the company delivered a slight miss in its Q2 earnings.
The company reported a consolidated net profit of Rs 6,506 crore for Q2FY25, reflecting a 2.2 percent sequential increase, though it fell short of Moneycontrol's estimate of Rs 6,769 crore. Revenue from operations grew 4.2 percent quarter-on-quarter to Rs 40,986 crore, slightly missing the forecast of Rs 40,857 crore.
Brokerage firm Morgan Stanley had forecasted the possibility of a bit of stock correction for Infosys in the near-term, largely due to its earnings miss. However, the brokerage also advised investors to build fresh positions during such a potential correction.
On the technical level, Morgan Stanley sees a strong support coming in for the stock at its five-year average free-cash-flow multiple--which sits at Rs 1,780.
Much like Morgan Stanley's expectations, Infosys shares reached a day's low of Rs 1,889 shortly after the market opened, but the fall was quickly absorbed as buyers stepped in.. Likewise, the stock came sharply off its lows and at 09.24 am, it was trading at Rs 1,936.85 on the NSE.
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American Depository Receipts (ADRs) of Infosys had also slipped 4 percent to its day's low on the New York Stock Exchange (NYSE) overnight, but pared much of its losses to eventually settle just 1 percent lower.
Despite the marginal miss on earnings, the IT major raised its FY25 revenue guidance to 3.75-4.5 percent in constant currency terms, an increase from the previous quarter’s range of 3-4 percent.
Infosys' revenue guidance lift was driven by improved and broad-based Q2 performance, increased volumes, and growth in its small-deal pipeline. The company's operating margin guidance for FY25 remained steady at 20-22 percent.
Brokerages regarded the guidance upgrade as a hint towards a revival in discretionary spending. Names like Nomura and Nuvama Institutional Equities further believe that Infosys will turn out to be a key beneficiary of the revival in discretionary spending in the sector.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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