Nomura has maintained neutral rating, while raised target to Rs 805 from Rs 760 per share.
Infosys share price rose more than 5 percent intraday on January 13 after the company reported better-than-expected numbers for the quarter ended December 2019 (Q3FY20).
The company has reported an 11 percent jump in its Q3 consolidated net profit to Rs 4,457 crore from Rs 4,019 crore QoQ, driven by higher other income and lower other expenses. The year-on-year profit growth was 23.5 percent.
Consolidated revenue during the quarter ended December 2019 grew 2 percent sequentially to Rs 23,092 crore.
The dollar revenue growth was 1 percent QoQ at USD 3,243 million in Q3, and it was same in constant currency at 1 percent QoQ (up 9.5 percent YoY) against 3.3 percent in Q2FY20 and 2.7 percent in Q3FY19.
The IT company revised its full-year constant currency revenue growth guidance to 10-10.5 percent, from 9-10 percent earlier, but maintained its EBIT margin forecast 21-23 percent for FY20.
Also, the Audit Committee of the company found no evidence of financial impropriety or executive misconduct.
According to a release filed with the exchanges, the committee looked into the allegations contained in the anonymous whistleblower complaints that the company disclosed on October 21, 2019, and, “… determined that the allegations are substantially without merit.”
It also stated that the allegations regarding the visa costs were unsubstantiated, and were appropriately accounted for. With regards to the allegations over large deal approvals, the committee found them to be unsubstantiated.
HSBC | Rating: Buy | Target: Raised to Rs 810 from Rs 800 per share
The company's Q3 is in-line with expectations leading to upgrade in FY20 guidance. The deal wins remain strong and the company will continue to gain higher market share.
Nomura | Rating: Neutral | Target: Raised to Rs 805 from Rs 760 per share
The overhang of whistleblower allegations is now behind and prefer Infosys to TCS on valuations.
Research house neutral on YoY growth moderation & Weak BFSI/retail outlook.
It expects the margin to stabilise at 22% over FY20-22 and expect the company to post 8.1%/7.3% Rev/EPS CAGR over FY19-22.
Jefferies | Rating: Buy | Target: Cut to Rs 850 from Rs 915 per share
The company's Q3 results were largely in-line, however, some softness in BFSI is expected to continue going ahead.
Its retail segment remains under pressure. The FY20 EPS estimate raised by 2.36%, FY21 & FY22 by 0.2% & 0.4% respectively.
Credits Suisse | Rating: Underperform | Target: Rs 720 per share
The revenue growth of 1% QoQ CC is marginally below expectations of 1.3%/1.5% and margin of 21.9%, is 20 bps below expectations of 22.1%.
The QoQ performance is a tad disappointing given forex tailwind, while guidance was not a major positive as consensus growth target are already at 11%.
UBS | Rating: Neutral | Target: Rs 900 per share
The cyclical demand recovery could result in near-term revenue spikes. Meanwhile, the upgraded guidance and investigation outcome should be well received by the market.
Goldman Sachs | Rating: Neutral | Target: Rs 718 per share
The Q3 earnings were in-line with challenging base ahead amid a cyclical slowdown.
Goldman Sachs maintained revenue growth forecasts for FY21 at 7.8% in CC versus 10.3% in FY20 and lower FY20-22 margin target in-line with weakness in Q3.
The FY20-22 EPS estimates move up by 1.6%/1%/1.1% on lower tax rate assumption.
Citi | Rating: Buy | Target: Raised to Rs 865 from Rs 830 per share
According to Citi, the Q3 revenue was slightly below, while margin in-line with estimates. The attrition is lower and guidance revision positive.
The investigation outcome should give investors more comfort.
BofAML | Rating: Buy | Target: Rs 825 per share
The revenue growth likely includes 40 bps QoQ of inorganic contribution. At USD 1.8 billion, the large deal signings remained strong. The key negative is the deceleration in financial services.
Kotak | Rating: Add | Target: Raised to Rs 865 from Rs 840 per share
The company delivered robust yet in-line results. Also reported good operating metrics with an increase in the number of large accounts.
The company can sustain/exceed peer-level growth with stable margins as the valuations are attractive at current levels.
The revenue growth estimate for FY21 stands at 8.4% and raise EPS estimate by 1-1.5%.At 11:16 hrs, Infosys was quoting at Rs 775.35, up Rs 37.20, or 5.04 percent on the BSE.
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