Home / Markets / Stock Markets /  Infosys vs TCS: Which IT stock is the top pick post Q4 results?

India's second biggest IT service provider Infosys' net profit rose 12% to 5,686 crore for the quarter ended March from 5,076 crore in the year-ago period while its revenue grew nearly 23% to 32,276 crore as compared to 26,311 crore year-on-year (YoY).

Infosys has projected 13-15% revenue growth for the current fiscal amid a robust deal pipeline and continued demand for digital and cloud computing services. The company has an operating margin guidance of 21%-23% for FY23.

Infosys trades at a10% discount to TCS, despite having 2% higher earnings growth outlook, highlighted global brokerage Jefferies. “While we expect the stock to correct post Q4 results, we note that since FY20, whenever Infosys trades at a 10% discount to TCS, its stock has outperformed TCS by 10% in the following 12 months," the note added.

Jefferies has maintained its ‘Buy’ tag on Infosys shares with revised target price of 2,050 on strong growth outlook even as Infosys' Q4 results missed estimates.

On why the Q4 numbers have trailed the street's expectations, Infosys CEO Salil Parekh told reporters in a briefing that while there has been a strong volume growth in the quarter, there was an issue with a client related to a contract situation.

“Though growth in 4QFY22 was muted, demand remains intact and the order book remains strong. The management’s FY23 growth guidance and high headcount addition provide further visibility on demand," as per domestic brokerage Motilal Oswal which has a Buy rating on the IT stock with target price of 2,000 per share.

Analysts at brokerage Emkay believe that the operating performance miss would weigh on the stock in the near term. It has maintained Buy with a revised target price of 1,970, considering broad-based demand, steady market share gain and robust cash generation.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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