Infosys Q3 results beat estimates; brokerages see up to Rs 600 gain per share

Infosys Limited’s better than estimated earnings for the third quarter cheered seven top brokerages while a couple took a contrarian view on the stock’s prospects. Macquarie is most bullish on Infosys, seeing Rs 600 per share gains. It has recommended the price target of Rs 2080 and maintains an ‘Outperform’ rating.   

Infosys shares bounced back around 1:30 pm after falling in initial trade tracking movement in the frontline indices S&P BSE Sensex and NSE Nifty50. They were up by Rs 35.40 or 2.39 per cent on the NSE at around 10 am and were trading at Rs 1,516. 

On Thursday, Infosys reported a 5 per cent quarter-on-quarter jump in consolidated revenue at Rs 38,318 versus Rs 36,538 crore the company posted in the preceding quarter. Net Profit or Profit After Tax (PAT) was up 9.4 per cent for the reporting quarter at Rs 6,586 crore. It was marginally better than Zee Business’ estimates of Rs 6,580 crore.  

However, at 21.5 per cent, the margins were lower than 21.6 per cent expected by the street. It was unchanged on sequential basis.    

Company’s FY23 revenue growth guidance points to a stable near-term demand outlook, notwithstanding a minor upgrade, CLSA noted. The Bengaluru headquartered company has given revenue growth over all three quarters this fiscal year beating estimates is yet another positive for the company. Large deal wins draw a health outlook, the Hong Kong headquartered investment group said.      

What Other Brokerages Recommend 

-- Jefferies maintains a buy on Infosys and has raised targets to Rs 1,770 from 1,760.  

-- Morgan Stanley maintains ‘Overweight’ with a price target of Rs 1,670. Resilience in revenue growth and good momentum in new large deal win augurs well for Infosys, it noted.  

-- Credit Suisse maintains ‘Outperform raises target raised to Rs 1,760 from 1,710.  

-- HSBC maintains a buy and revises target upwards to Rs 1,800 from Rs 1,730.  

-- Nomura maintains a buy with target of Rs 1,900.  

Contrarian View

While Citi retains a buy on Infosys, it has cut targets for Rs 1,745 to Rs 1,665. It said that revenues reported this quarter have beaten estimates aided by third party items bought for service delivery (110 bps qoq). It saw this as a headwind to company’s margins while advocating a caution on fourth quarter guidance.  

Meanwhile, JP Morgan maintains a ‘Neutral’ rating suggesting a price target of Rs 1,700.  The brokerage firm noted acceleration in underlying growth slowdown. It further said that services growth has been impacted by furloughs and demand softness in select Industries. It foresees growth moderation over the rest of CY2023.

Morgan Stanley said that the company missed estimated margin targets and its recovery lagged peers. 

Technical View:

Technical Analyst Nilesh Jain said that the short term view on this stock is not positive and an investor willing to put money can accumulate with a long term perspective. The immediate target on this stock is Rs 1,500, he added.

Source: NSE  

The stock has underperformed Nifty50 by over 18 per cent giving negative returns of nearly 20 per cent against (-) 2 per cent returned by the broader market index.  

Source:NSE

(Disclaimer: The views/suggestions/advises expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)