Infosys share price gains 12% on Q1 earnings, brokerages raise target price

Infosys share rose in early trade today after the IT major reported a 11.5 per cent growth in consolidated net profit in first quarter current fiscal. Share price of Infosys gained 12.09% to Rs 932 against previous close of Rs 831.45 on BSE. The stock opened with a gain of 8.24% at Rs 900. It has risen 16.77% in the last 2 days. Infosys stock price is trading higher than 5, 20, 50, 100 and 200-day moving averages.

Market capitalisation of IT firm climbed to Rs 3.90 lakh crore. Infosys stock has risen 18.62% in one week, 32.26% in one month and 27% since the beginning of the year. The stock has gained 18% in one year. Total 7.56 lakh shares changed hands amounting to turnover of Rs 69.28 crore.

Nomura referred to Infosys QI earnings as stellar and upgraded the stock to buy with a target of Rs 975. The firm has improved digital positioning, silver linings from COVID and strong client franchise positions well for demand recovery. The brokerage referred to Infy as its top pick and said guidance for growth in FY21 will be taken positively.

Infosys reported Rs 4,233 crore net profit in first quarter ended June 30, 2020 against Rs 3,798 crore in the same period last year. On a quarter-on-quarter basis, profit fell 2 per cent from Rs 4,321 crore in March quarter of FY20.

The IT major surprised the market by giving full year constant currency revenue growth guidance amid COVID-19 pandemic. The company expects its FY21 revenue to grow by up to 2 per cent in constant currency terms. In April, the IT firm had refrained from providing a revenue outlook for FY21, citing uncertainty amid COVID-19 outbreak.

CITI too said Infosys reported strong Q1 earnings and raised its target price on the stock to Rs 1,000 from Rs 825. It raised EPS estimates by 6-7% for FY21E-23E. The firm also raised its multiple to 23 times FY22E (earlier 20 times; premium to peer TCS now.

Revenue rose 8.5 per cent to Rs 23,665 crore in Q1 from Rs 21,803 crore in the corresponding period last fiscal. On a sequential basis, revenue rose 1.7 per cent from Rs 23,267 crore in the previous quarter.

Infosys Q1 profit jumps 11.5% to Rs 4,233 crore, pegs FY21 revenue growth at 0-2%

CLSA said the stock is best in class buy and raised target price to Rs 1,000 from Rs 860. Infosys could be the only scale player to report year on year growth in FY21. The brokerage raised FY21/FY22 EPS estimates by 9%.

"Our Q1 results, especially growth, are a clear testimony to the relevance of our service offerings and deep understanding of clients' business priorities which is resonating with them in these times. It also demonstrates the remarkable dedication of our employees and leadership during this period", said Salil Parekh, CEO and MD. "Our confidence and visibility for the rest of the year is improving driven by our Q1 performance and large deal wins," he added.

Ahead of Q1 earnings, shares of Infosys closed at Rs 831.45 on July 15, up 6.16 per cent, against earlier close of Rs 783.20 on BSE.

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By Aseem Thapliyal