BackIT major Infosys which paid 620% dividend in FY22 is likely to surprise investors on 13 Oct. Should you buy?
Infosys has been giving massive dividends to its investors and most likely it will announce its first interim dividend for fiscal year FY23 next week. The IT major will also announce its September 2022 quarterly earnings.
PremiumDividends are a form of incentive given by a listed company to shareholders from the profit they earned in a particular fiscal year. That being said, Infosys has been giving massive dividends to its investors and most likely it will announce its first interim dividend for fiscal year FY23 next week. The IT major will also announce its September 2022 quarterly earnings. In FY22 alone, Infosys had given a whopping 620% dividend to shareholders.
On BSE, Infosys shares closed at ₹1,451.75 apiece down by ₹3.20 or 0.22%. The company's market cap is around ₹6,10,871.36 crore.
Last month, in its regulatory filing, Infosys said, "The financial results and proposal for interim dividend, if any, will be presented to the Board of Directors on October 13, 2022, for their approval."
The company's board will meet on October 12 and 13 to approve financial results in Ind AS for the quarter and half year ending September 30, 2022. Also, the board will consider the first interim dividend for FY23.
For the financial year FY22, Infosys paid a 620% equity dividend to its shareholders aggregating to ₹31 per share. For this fiscal, the first interim dividend of ₹15 per share was announced on October 13, 2021, while the final dividend of ₹16 per share was declared on April 13, 2022.
At the current market price, Infosys has a dividend yield of over 2.1%.
Should you buy Infosys shares?
In their Technology Q2 preview report, Mukul Garg and Raj Prakash Bhanushali Research Analysts at Motilal Oswal expect good demand from Infosys with good deal conversions. In terms of constant currency, the analysts expect the company to deliver a USD revenue growth of 4.3% QoQ, although adverse cross-currency movements will drag reported growth.
However, analysts expect weaker-than-expected margins as supply-side challenges continue to remain elevated. Also, commentary on deal wins and margins will be key monitorables for Infosys.
Motilal Oswal analysts have set a 'buy' recommendation on Infosys with a target price of ₹1,640 apiece.
Meanwhile, Jefferies in its Q2 preview report on Infosys said, "We expect 2QFY23 revenue growth to be strong at 4% QoQcc, driven by deal ramp-ups and seasonal strength. We expect Ebit margins to expand by 30bps QoQ, driven by pyramiding, operating leverage, and pricing benefits, amidst supply-side pressures, higher costs, and continued investments in growth. We expect Infosys to retain its 14-16% YoYcc revenue growth guidance and 21-23% margin guidance."
Jefferies has set a buy recommendation with a target price of ₹1,700 apiece on Infosys.
In Q1FY23, Infosys delivered a robust performance in Q1 with year-on-year growth at 21.4% and sequential growth at 5.5% in constant currency. Year-on-year growth was in double digits across all business segments in constant currency terms. Digital accounted for 61.0% of overall revenues, growing at 37.5% in constant currency. Net hiring was strong at 21,171. The operating margin for the quarter was 20.1%, with Free Cash Flow conversion at 95.2% of net profit.
During the first quarter, Infosys recorded a 3.2% yoy growth in consolidated net profit to ₹5,360 crore, while revenue from operations stood at ₹34,470 crore higher by 23.6% yoy.
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