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Analysts said Infosys' ability to sign lucrative deals enabled it to weather the quarter with relative success. (MINT_PRINT)
Analysts said Infosys' ability to sign lucrative deals enabled it to weather the quarter with relative success. (MINT_PRINT)

Infosys hits 5 trillion in market cap

  • Currently, Reliance Industries is India’s most-valued firm with market capitalisation of 15.43 trillion, followed by TCS and HDFC Bank at 10.42 trillion and 6.62 trillion, respectively

MUMBAI: Infosys Ltd on Thursday became the fifth Indian firm to cross 5 trillion in market capitalisation, with the stock having rallied nearly 61% so far this year. It is the second IT firm in the country to have achieved the milestone.

The stock touched a fresh record high of 1,185 apiece on the BSE today, up 4.3% from its previous close, pushing its market cap to 5.04 trillion following the company's better-than-expected September quarter earnings.

Infosys also raised its annual revenue growth forecast on continued strength in digital services operations.

Currently, Reliance Industries is India’s most-valued firm with market capitalisation of 15.43 trillion, followed by TCS and HDFC Bank at 10.42 trillion and 6.62 trillion, respectively.

Infosys raised its revenue growth guidance to 2-3% for the year to 31 March from the earlier 0-2% in constant currency terms and provided margin guidance of 23-24% versus 21-23% earlier.

"Upward revision to FY21 guidance with revenue growth is positive but still conservative", said Motilal Oswal in a report to its investors. " We expect Infosys to deliver above guidance in FY21 notwithstanding margin headwinds (wage hikes in 4Q, large deal ramp-up, seasonality, above margin factors, etc.) and based on strong deal wins", the report added.

Its profit for the quarter rose 20.5% to 4,845 crore from a year ago. Revenue increased 8.6% to 24,570 crore. Dollar revenue grew 3.2% year-on-year and 6.1% sequentially to $3.31 billion on the back of large deal wins worth $3.15 billion. Operating margin expanded to 25.4% from 22.7% in the preceding three months.

"We remain constructive on Infosys in the medium to long term with its ability to engage with large clients for their large transformation programs; we expect Infosys medium to long term growth to be similar to TCS and expect payout ratio to improve gradually, reaching similar payout ratio of TCS in 3-5 years. We increase Infosys valuation multiple to 24x (from 23x earlier) forward PE on FY23e EPS which is line with our valuation multiple of TCS. We expect TCS and Infosys long term growth rate to be similar to TCS," said Antique Broking in its report to its investors.

The brokerage has raised its target price for the stock to 1,280 apiece from 1,150.

Of the 47 brokers tracking the Infosys stock on Bloomberg, 41 have recommended a “buy" rating, two have a “sell" on the stock and four have a “hold" rating.

Many brokerage firms have increased their target price on the scrip after Infosys’s September quarter earnings. Motilal Oswal has reiterated Buy and increased its target price by 19% to 1,355 a share, Emkay has increased its target price to 1,360 from 1,137 a share, Elara has retained Buy with a higher target price of 1,325 apiece, BoB Cap has retained ADD rating with a target price to 1,210 from 1,020 a share.

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