Infosys shareholders gain ₹50,000 crore in an hour as shares zoom to new high2 min read . Updated: 16 Jul 2020, 11:09 AM IST
- Infosys said it secured deals worth $1.74 billion during the period, higher than the $1.65 billion reported in the previous quarter
- Many brokerage have raised their target price on Infosys shares
Better-than-expected earnings from IT major Infosys pushed its shares to a record high, adding about ₹50,000 crore to its investors' wealth in the first hour of trade on BSE. Infosys on Wednesday reported an 11.4% rise in quarterly net profits, winning large client deals despite coronavirus-led disruptions. Infosys shares rose as much as 15% to ₹952 on BSE.
The Bangalore-headquartered firm posted a net profit of ₹4,233 crore for the quarter ended June 30, an increase from the ₹3,798 crore recorded a year earlier for the same period. Infosys said it secured deals worth $1.74 billion during the period, higher than the $1.65 billion reported in the previous quarter.
Infosys also benefited from the Indian rupee's depreciation against the US dollar.
Revenues rose to ₹23,665 crore, an increase of 8.5%, the company said.
"Our Q1 results, especially growth, are a clear testimony to the relevance of our service offerings and deep understanding of clients' business priorities which is resonating with them in these times," Salil Parekh, Chief Executive of Infosys, said in a statement.
Analysts said the firm's ability to sign lucrative deals enabled it to weather the quarter with relative success.
The Bengaluru-based firm expects revenue to be flat or grow 2% on a constant currency basis and operating margins of 21%-23% for 2020-21. This compares with a revenue growth of 9% or more in the last two years on a constant currency basis. The company had not provided any projections in the March quarter, citing COVID-19-related uncertainty.
Domestic brokerage Edelweiss has upgraded it target price on Infosys to ₹1,080, from ₹950 earlier, reiterating its "buy" call.
"Infosys’s results beat estimates substantially (revenue/margins), but the key positive is the reiteration of revenue guidance growth of 0–2% (CC) for FY21. We believe Indian IT is at the bottom of a tech upcycle as explosion of digital activity is catalysing transformation of core, cloud adoption and build-up of digital capabilities," the brokerage said.
Another brokerage Motilal Oswal also raised its target price on Infosys to ₹1,050.
"The company’s absolute and relative performance (v/s TCS and Wipro) during the quarter is indicative of some of the investments made in the previous years now paying off. As the COVID-19-led disruption eases, we expect further expansion in margins as investments stabilize and back-ended productivity benefits kick in. We expect Infosys to be a key beneficiary in terms of recovery in IT spends in FY22," the brokerage said.
(With Agency Inputs)