Shares of the country's second largest software services exporter - Infosys - rose as much as 5.19 per cent, its biggest single-day jump since April 19, to hit an intraday high of Rs 1,493.45 a day after it reported September quarter earnings.
Infosys surprised Dalal Street analysts by posting better-than-anticipated 12 per cent sequential growth in net profit which came in at Rs 6.021 crore compared with Rs 5,360 crore in June quarter. On annual basis, its net profit rose 11 per cent. The sharp jump in net profit came on the back of strong deal wins. Infosys' clocked large deal total contract value (TCV) of $2.7 billion in September quarter which was highest in last seven quarters.
Strong deal wins came as a surprise to analysts as they were expecting deal wins to slow down due to fears of recession in US market, which is the largest market for Indian IT companies, market participants said.
The company also announced a share buyback proposal worth Rs 9,300 crore at Rs 1,850 per share which further raised investors’ confidence in the stock. Infosys' share buyback price was 30 per cent higher than its yesterday's closing price of Rs 1,419.75. Its board also announced an interim dividend of Rs 16.50 per share.
“Our strong large deal wins and steady all-round growth in Q2 reflect the deep relevance and differentiation of our digital and cloud solutions for clients as they navigate their business transformation”, said Salil Parekh, CEO and MD. “While concerns around the economic outlook persist, our demand pipeline is strong as clients remain confident in our ability to deliver the value they seek, both on the growth and efficiency of their businesses. This is reflected in our revised revenue guidance of 15%-16% for FY 23”, he added.
Infosys' revenue in constant currency terms advanced 4 per cent sequentially and the company's revenue from operations came in at Rs 36,538 crore. In dollar terms, Infosys reported revenue of $4,555 million, registering an annual growth of 13.9 per cent.
Year on year growth was in double digits across all business segments in constant currency terms. Digital comprised 61.8 per cent of overall revenues and grew at 31.2 per cent in constant currency. Operating margin for the quarter increased sequentially by 140 basis points to 21.5 per cent. Large deal TCV for the quarter was robust at $2.7 billion, highest in last 7 quarters, Infosys said in a press release.
Domestic brokerage firm Motilal Oswal has buy rating in the stock for target price of Rs 1,630 indicating an upside of 15 per cent.
Infosys posted a strong set of earnings in September quarter earnings. Demand and the order book remain robust. Its strong FY23 growth guidance and high headcount addition provides further demand visibility, Motilal Oswal said.
The brokerage expects Infosys to deliver margin at the lower side of its guidance band, with strong growth and reduced dependence on sub-contractors as attrition falls. It also expects Infosys to be a key beneficiary of acceleration in IT spending and based on its revised estimates, the stock is currently trading at 22 times FY24 estimated EPS.
