Moneycontrol Bureau
Shares of Infosys are flying off the shelves after it surprised the street with its March quarter results on Friday. Infosys rallied over 8 percent touching record high of Rs 1267.90 per share on Monday. The IT software major’s profit grew by 3.8 percent to Rs 3597 crore in January-March quarter compared to Rs 3,465 crore in preceding quarter despite fall in other income. Rupee revenue increased 4.1 percent sequentially to 16,550 crore from Rs 13,411 crore in same period. Dollar revenue in Q4 rose 1.6 percent to USD 2,446 million and 1.9 percent in constant currency compared to preceding quarter.
So, will the rally and appetite for infosys last?
Credit Suisse feels the stock may touch Rs 1450 per share stating it will remain a solid defensive stock for the time being. The brokerage firm has an outperform rating on the stock. It is impressed that Infosys' FY17 guidance is encouraging. Infosys guided to 11.5-13.5 percent revenue growth in constant currency for FY17. However, it adds that there are some minor downward model revisions due to lower yields assumed on the cash balance.
CLSA has increased its target price to Rs 1350 a piece. But the firm has downgraded the stock to outperform from buy as it sees challenges for further acceleration of the company till client mining can be broad based.
It adds that while Infosys has clearly been able to increase growth dramatically over the past year, its margin looks softer than a year ago while there is limited incremental traction on capital allocation beyond FY15’s dividend increase. Margin cuts along with a likely lower interest yield and higher taxes have also lead to drive minor cuts to its FY17/18 earnings.
"Infosys’ shares appear to have come full circle the last year from a ‘show-me’ stock post Q4FY15 to industry leadership beginning to be priced in at an 18.5x 1-year forward PE," it says in a note.
Meanwhile, Deutsche Bank has retained hold rating with a target price of Rs 1200 per share. It cautions that Infosys' guidance is healthy but does not suggest meaningful acceleration while pricing declines limit the upside to guidance and margins. Deutsche Bank will keenly watch for any improvement in the large deal total contract value and pricing trajectory, before changing view.
At 10:58 hrs Infosys was quoting at Rs 1,248.15, up Rs 76.10, or 6.49 percent on the BSE.
Follow @NasrinzStory
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
