Analysts revise Infosys targets after Q3 earnings beat estimates, see up to 61% upside

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Analysts revise Infosys targets after Q3 earnings beat estimates, see up to 61% upside


NEW DELHI: Infosys‘s third quarter results beat Street projections and analysts’ fresh targets suggest up to 61 per cent potential upside in the scrip, even as the stock took a breather on Thursday following a 15 per cent rally in the last one month.

Foreign brokerage CLSA finds the stock worth Rs 1,620 apiece. It said that the December quarter results indicated improved confidence on the margin defence front, terming the company’s deal wins strong and outlook optimistic. The brokerage expects Infosys’s FY22-23 margins to stay at the upper band of 23-24 per cent.

Citi sees the stock at Rs 1,590, as it increased its FY21-23 EPS estimates for the IT firm by 1-8 per cent, and values the stock at 29 times. Deals were meaningfully higher, it said, noting that the margin and revenue guidances were revised upward.

Infosys said it has signed large deals worth $7.13 billion. At the same time, its digital revenue crossed 50 per cent of the total revenue during the quarter, resulting in a year-on-year growth of 31.3 per cent in constant currency terms.

“We maintain that Infosys, given its significant contribution from cloud and digital, remains a major beneficiary of this tech upcycle. Maintain ‘buy’ while increasing the target price from Rs 1,850 to Rs 2,124 (36 times Q1 FY23E) as we roll forward to Q1FY23E,” Edelweiss said.

On Thursday, the stock fell 5 per cent to hit a low of Rs 1,318.05 on BSE. Infosys target at the prevailing price suggests a 61.14 per cent potential upside.

Jefferies said even after adjusting for the $3-billion Daimler deal this quarter, and the $1.5 billion Vanguard deal, deal TCV still more than doubled sequentially. The company signed large deals worth over $12 billion in the first nine months of FY21, with $8 billion in net new deals. “This provides growth visibility for Infosys in future. Jefferies sees the stock at Rs 1,550” it added.

Macquarie has a target of Rs 1,500 on the stock. Macquarie said Infosys is among its top 4 largecap picks. Credit Suisse has a target of Rs 1,810.

On Wednesday, the IT major reported a 16.8 per cent YoY rise in consolidated net profit for the December quarter to Rs 5,215 crore. For the corresponding quarter last year, it had reported a profit of Rs 4,466 crore.

Gross revenue for the quarter rose 12.3 per cent YoY to Rs 25,927 crore. It was up 5.5 per cent on a sequential basis. In constant currency terms, revenue growth was 6.6 per cent.

The company said its Q3 operating margin stood at 25.4 per cent, marking an increase of 350 bps over the year-ago period.

The IT major raised its revenue and margin guidance bands to 4.5-5 per cent and 24-24.5 per cent respectively.





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