Infosys hits record high, rallies for 8th straight day; up 13% in a month

Shares of Infosys rose 1 per cent to hit a record high of Rs 1,484.10 on the BSE in intra-day trade on Wednesday in an otherwise subdued market. The stock of the information technology (IT) major surpassed its previous high of Rs 1,480 touched on April 12, 2021.

Infosys was trading higher for eight straight days. At 01:25 pm, the stock was up 0.45 per cent at Rs 1,479.45, as compared to a 0.41 per cent decline in the S&P BSE Sensex.

Infosys on Monday, June 14, 2021, informed the stock exchanges that the meeting of the Board of directors of the company is scheduled on July 14, 2021, inter alia, to consider and approve the audited consolidated financial results of the company for the quarter ending June 30, 2021 (Q1FY22).

In the past one week, the stock has gained 5 per cent, while in one month it has rallied 13 per cent, as compared to a rise of 1 per cent and 8 per cent, respectively in the benchmark index.

Analysts at Prabhudas Lilladher said they were impressed with the strong growth in P&P (Products & Platforms) revenues at 23 per cent year-on-year (YoY) for the financial year 2020-21 (FY21), led by pick up in McCamish, EdgeVerve, and Stater (accounts for 91 per cent of P&P revenues). Also, R&D spends at Rs 950 crore (0.9 per cent of sales) have remained stable.

“The company’s FCF/PAT ratio is at an all-time high (115 per cent) led by 36 per cent YoY decline in capex, 30 per cent YoY growth in CFO and 45 per cent YoY growth in FCFE. We maintain that Infosys will be at the forefront of digital transformation, also its focused execution is clearly visible in deal win momentum, revenue acceleration and margin resilience,” analysts said on FY21 annual report analysis.

ICICI Direct has a ‘buy’ rating on Infosys with a target price of Rs 1,650 per share as analysts at the brokerage firm expect IT spends to improve led by cloud migration, increased spend by companies in customer and employee experience (P&L led investment), and ancillary technologies like AI, IOT, data analytics.

“An improved demand environment, traction in large deals, increase in outsourcing in the US and Europe, vendor consolidation opportunities, captive carve-outs and cost takeout deals are expected to drive revenues in the long term. In addition, healthy traction in digital revenues, revenue growth outpacing Tata Consultancy Services (TCS) over the past 12 months and margin gap narrowing with TCS are other key positives. This, coupled with healthy cash conversion, robust capital allocation policy and EPS accretive buyback prompt us to be positive on the stock,” the brokerage firm had said in its Q4FY21 result update.