Infosys Ltd shares rise nearly 5% At 1,487 each on the BSE in early deals on Friday, India’s second-largest IT services company posted a better-than-expected 11% in year-on-year (YoY) consolidated net profit. Announces buyback of 6,021 crore more shares for the second quarter ended September 2022 9,300 crore through the open market route for a price of up to Rs. 1,850 per equity share.
Infosys Board has also declared interim dividend of 16.50 per share. Interim dividend payout will be approx. 6,940 crore, the company said in a statement. Meanwhile, operating margin for the quarter rose 140 basis points sequentially to 21.5%.
“Infosys’ Q2 results were above estimates driven by margin expansion. Deal wins at seven quarterly highs and healthy hiring trends provide comfort on growth. Infosys’ strong deal bookings and consistent execution provide comfort amid uncertain macros. While the valuation at 23x is still at a premium to the 10-year average of 19x, we believe this is justified given the improved growth outlook,” said global brokerage Jefferies while maintaining the buy rating. Infosys shares with a target price of 1,710 per.
The Bengaluru-headquartered company raised its FY23 revenue growth guidance to 15-16%, pushing the forecast towards the higher end of the previously projected 14-16% band. However, the company has lowered the upper end of operating margin guidance and now expects operating margins in the band of 21-22% for FY13, as against 21-23% cited earlier.
The IT company’s management said the deal wins and the pipeline indicates a healthy demand environment, though they are seeing increased caution from customers. Margin improvement is driven by cost-optimization and FX benefits, among others.
“Management highlighted that the demand environment remains strong, and the large deal pipeline is larger than it has been in the last few quarters. We reiterate that this tech upcycle will greatly benefit the growth of Infosys.” IT Stock with a target price of 1,891 on assessment rollover basis.
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