MUMBAI:Shares of Infosys Ltd on Thursday hit 10% upper circuit after the company reported a stronger than expected profit, bolstered by the large deals it managed to secure from clients during the covid-19 lockdown. Many brokerages increasing the target price boosted investor confidence.
The stock hit a fresh life time high of ₹914.55 on BSE, up 10% from previous close.
The company reported a profit of ₹4,233 crore in June quarter, up 11.4% from ₹3,798 crore a year ago. Margin at the level of earnings before interest and taxes improved 150 basis points quarter on quarter to 22.7%. A Reuters poll had expected a profit of ₹3,987 crore.
“Deal wins and the deal pipeline are healthy. The reinstatement of revenue and margin guidance is a key morale booster. As the company and its clients have been through the COVID-19 learning curve, we understand the company should be able to manage revenue/margin performance within a narrow band despite incremental risks, such as a second wave of infections, the re-imposition of lockdown, etc.” said Motital Oswal in a note to its investors
Infosys expects a constant currency growth in revenue of 0%-2% and operating margin between 21% and 23%. The management believes that with a continued attention to client needs, employee well being, cost and cash focus, and strong client reaffirmation, it will emerge stronger from this crisis.
Brokerage firm Sharekhan says that even as reduction of IT spending is expected during 2020, Infosys is well poised to gain share in the recessionary environment and outperform peers in terms of revenue growth in FY2021E.
“We remain constructive on Infosys in the medium to long term with its ability to engage with large clients for their transformation programs. Post strong Q1FY21 results, we expect near term growth visibility of Infosys to be better than TCS; while expect long term growth to remain in-line with TCS,” said Antique Stock Broking in a note to its investors.
Antique has increased its stock target to ₹1,000, up 20% from earlier, IDBI Capital has increased its target price to ₹895 a share, up 8% from earlier target. Brokerage firm Sharekhan has raised its target price to ₹920.