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Infosys: Buy, sell or hold the stock after Q2 earnings?

Revenue from digital business contributed 56.1% to total revenues and was up 42.4% on a YOY basis.

October 14, 2021 / 09:41 AM IST
 
 
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The Infosys share price gained more than 3 percent in the early trade on October 14 after the company reported its September quarter earnings a day in advance.

Infosys has reported a consolidated profit at Rs 5,421 crore for the quarter ended September 2021. Its net profit increased 11.9 percent year-on-year and 4.4 percent over Rs 5,195 crore in the June quarter.

Its consolidated revenue increased to Rs 29,602 crore during the period from  Rs 27,896 crore in the previous quarter, a sequential growth of 6.1 percent, and a growth of 20.5 percent compared with the corresponding period last year when the company had reported a revenue of Rs 24,570 crore.

Revenue from the digital business contributed 56.1 percent to the total revenue and was up 42.4 percent over the year-ago period.

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Here is what foreign brokerages have to say about the stock and the company after its September quarter earnings:

CLSA | Rating: Buy | Target: Raised to Rs 2,060

CLSA has maintained 'buy' as results have been reassuring on demand strength and the ability to manage rising supply-side pressure.

However, heavy renewal order booking has been a dampener in the second successive quarter. The broking house raised FY22/23 EPS estimates by 1 percent each.

Goldman Sachs | Rating: Buy | Target: Rs 2,149

Goldman Sachs has reiterated 'buy' given best-in class digital capability and seamless management execution.

The earnings were above expectation on margin and strong execution.

Infosys continues to be the fastest-growing large-cap IT company in our coverage and increase revenue growth forecasts but cut down margin, said Goldman Sachs.

The EPS estimates changed by -2 percent to +2 percent over FY22-26

UBS | Rating: Neutral | Target: Rs 1,820

UBS kept the neutral call with margin is the key positive in Q2, while TCV is a main concern.

There was a strong margin beat despite attrition spike and wage hikes and may see some consensus earnings upside.

UBS expect a positive near-term reaction, given a miss by TCS in Q2.

Macquarie | Rating: Outperform | Target: Rs 2,190

Macquarie maintained the 'outperform' call as the key positive surprise is a stronger-than-expected EBIT margin.

The guidance upgrade underscores its participation in strong industry demand trends.

Macquarie has raised FY22 EPS estimate by 1 percent, and it is a Marquee buy idea.

Morgan Stanley | Rating: Overweight | Target: Rs 1,920

Morgan Stanley remained 'overweight' on the stock after the Q2 performance was strong on both revenue and margin.

The softer large deal wins and rising attrition and margin headwinds are the key negatives in H2.

Morgan Stanly expects street EPS estimates to be unchanged and stock performance to be linked to relative discount to TCS.

Credit Suisse | Rating: Outperform | Target: Raised to Rs 2,250 from Rs 1,890

According to Credit Suisse, the revenue growth surprised positively. The margin decline contained due to operating leverage benefits.

It increased FY22-24 EPS estimates by 2.1-2.4 percent.

Kotak Institutional Equities | Rating: Buy | Target: Raised to Rs 2,000

Kotak Institutional Equities has maintained 'buy' rating after the company reported excellent all-round growth.

There was an improvement in client metrics and stable margin, while guidance is conservative even after material increase.

Raise FY22-24 revenue growth estimates by 1-1.5 percent.

At 9:20am, Infosys was quoting at Rs 1,768.50, up Rs 59.75, or 3.50 percent, on the BSE.

The share touched a 52-week high of Rs 1,787.50 and a 52-week low of Rs 1,051 on 24 September 2021 and 2 November 2020, respectively.

It is trading 1.06 percent below its 52-week high and 68.27 percent above its 52-week low.

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.
first published: Oct 14, 2021 09:41 am

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