Shares of Infosys
gained 2% in morning trade on Monday. In its Q3FY19 results declared on Friday after market hours, the IT major reported constant currency (cc) revenue growth of 2.7% qoq and US revenue of $2,987mn, up 2.2% sequentially.
The Adjusted PAT declined by 12.2% qoq to Rs3,610cr against the median consensus estimate of Rs4,149cr.
The company also announced buyback of Rs8,260cr
under the open market route at a maximum price of Rs800 per share.
Revenue in rupee terms grew 3.8% qoq to Rs21,400cr, which is higher than the median consensus estimate of Rs21,260cr.
The company has revised its FY19 revenue guidance in constant currency terms upward to 8.5-9% from 6-8% earlier. Infosys has retained the operating margin guidance.
Meanwhile, foreign brokerage firm CLSA has maintained a ‘Buy’ rating
on the stock and hiked its target price to Rs910. Broad-based growth led by key geographies, key verticals, digital growth acceleration, capital return, and a demand recovery merit a rerating, the firm added.
Infosys Ltd is currently trading at Rs698.70 up by Rs15 or 2.19% from its previous closing of Rs683.70 on the BSE. The scrip opened at Rs706 and has touched a high and low of Rs709 and Rs695.70 respectively.
The stock currently trades at ~15x its FY20E EPS. A decline in margins was expected, however, the higher-than-expected decline in margins may have been on account of higher investments. We believe that the beat on the revenue front suggests that the risk of execution is lowering for Infosys and margins are bound to remain under pressure in the near term.
More importantly, Infosys is readying itself to capitalize on the window of opportunity in the Digital spends space, and we believe that better efficiencies and onsite pyramid correction can help in margin defence. We maintain our positive view on the stock.