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Why Infosys stock hit lifetime high today amid lower-than-expected Q1 net profit

The stock of India's second-biggest software services exporter rose 5.75% to hit its life time high of 1384.40 compared to its previous close of 1309.10 on the BSE.

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Why Infosys stock hit lifetime high today amid lower than expected Q1 net profit

The Infosys stock rose to its all-time high on Monday despite the firm reporting a lower-than-expected 3.7 per cent rise in Q1 net profit, due to a one-off charge related to fair value reduction of up-for-sale Panaya business. The stock of India's second-biggest software services exporter rose 5.75% to hit its life time high of 1384.40 compared to its previous close of 1309.10 on the BSE.

Later, it closed 1.83% or 23.95 points higher at 1,333 level on profit booking at record levels.

Revenue rose 12 per cent to Rs 19,128 crore as the firm maintained earnings guidance for the fiscal year ending March 2019 at 6-8 per cent in constant currency terms.

The stock rose in trade today on the impact of positive management commentary.

Tracking positive outlook of CEO and MD Salil Parekh on the future prospects of Infosys on Friday (post market hours), the stock rose in trade today.

"With our Agile Digital business growing sequentially at 8% in constant currency and increase in our large deal wins to over US$ 1 billion, we see good traction in the market" said Parekh after the Q1 earnings announcement.  

Parekh also commented on the demand outlook of the Bengaluru-based firm.

"Overall, we see a good demand environment across the US, Europe and Asia Pacific. In terms of the sector demand, we see strength in energy, utilities, retail, insurance and manufacturing," said Parekh.

The stock has gained 37.14% during the last one year and has gained over 28% since the beginning of this year.

Ahead of the earnings announcement, Infosys shares closed 1.12 per cent higher at Rs 1,309.10 on Friday.

37 of 48 brokerages rate the stock "buy" or ''outperform'', six "hold" and five "underperform" or "sell", according to Reuters.

ICICIdirect.com today gave a hold recommendation on the stock at Rs 1355. The rating was issued when price of the stock stood at 1309. The target price of the recommendationis 1410.

Arihant Capital Markets too has given a hold recommendation  for the Infosys stock today at a level of Rs 1317.  The target price of the recommendation is 1411.

Investec Securities today assigned a buy recommendation to the stock at Rs 1309 level for a target price of 1440.

The time horizon for the above stock recommendations is 52 weeks.

The company also announced a surprise element, a 1:1 bonus share - that is one free share for every share held.

Revenue rose 12 per cent to Rs 19,128 crore as the firm maintained earnings guidance for the fiscal year ending March 2019 at 6-8 per cent in constant currency terms. The FY2018-19 operating margin guidance has also been retained at 22-24 per cent. Infosys has delivered operating margin at 23.7 per cent, hitting the upper end of the guidance band.

Infosys said large deal wins crossed $1 billion, of which over 40 per cent was from the financial services business. The company also managed to add four $100 million clients to take it to 24 on a sequential basis.

Capping the second quarter of earnings scorecard under Parekh's watch, Infosys' net profit, in dollar terms, declined 1.2 per cent year on year to $534 million for the quarter ended June 30, 2018, including impact of $39 million on account of reduction in the fair value of assets held for sale.

Revenues came in at $2,831 million for June quarter, translating into a year-on-year growth of 6.8 per cent and sequential rise of 0.9 per cent. Digital revenues stood at $803 million (28.4 per cent of total revenues), displaying a sequential growth of 8 per cent and year-on-year jump of over 25 in constant currency terms, Infosys said.

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