Brokerages maintained their view on Infosys Ltd after the information technology major reported June quarter numbers that matched analysts’ estimates.
Infosys’ margin performance and its ability to maintain the full-year constant currency guidance impressed brokerages.
Here’s more from the initial analysis of some of the brokerages.
Kotak Securities Ltd said that Infosys’ EBIT margins outperformed their expectations despite the 60 basis point sequential drop. The brokerage said that margins held up despite headwinds because of two factors:
The growing contribution from new service offerings was another positive, according to Kotak. Services started after 1 April 2015 contributed 10 percent to overall revenues.
Kotak said that the change initiated by Chief Executive Officer Vishal Sikka are in the right direction, but added that they expect 2 percent cut in FY18-19 earnings based on the change in rupee estimates.
The brokerage maintained its ‘Add’ rating on the stock and left its target price unchanged at Rs 1,015 per share.
Infosys’ stronger-than-expected June quarter performance will prompt a consensus earnings per share upgrade of between 2 percent to 4 percent over the current and next financial years, according to IDFC Securities Ltd.
Infosys’ guidance implies growth of between 2.04 percent to 3.28 percent sequentially, for the remaining quarters of the current financial year, IDFC Securities added in its note to clients.
IDFC retained 'Outperform' rating on the stock with target price of Rs 1,150.
Emkay Global Financial Services Ltd said that though the numbers are better than expected, there is little scope for major positives on an annual basis.
There has been no uptick on constant currency guidance despite better performance which indicates that the pricing gains are not sustainable, the brokerage wrote in its first cut note to clients.
The brokerage maintained its 'Accumulate' rating on the stock, with the target price of Rs 1,000.
The 12-month price target on the Infosys stock is Rs 1,065, according to the consensus of 54 analysts tracked by Bloomberg. 74 percent of those analysts have a ‘Buy’ rating on the stock.
The stock rose 2.8 percent in the past month, compared with the 2.7 percent advance in the S&P BSE Sensex Index.
(This article was originally published on BloombergQuint)
(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)