Infosys' Q2 FY23 results and ₹9,300 crore buyback programme has the market excitedInfosys
Infosys share price surged over 4% in early trade, after the company’s Q2 show and revised FY23 guidance.
Infosys also announced ₹9,300 crore worth share buyback programme, offering a 30% premium over October 13’s closing price.
Infy’s commentary has also resulted in brokerages increasing the stock’s target price with an upside of up to 33%.
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IT major Infosys’ shares surged by over 4% in early trade today after the company reported better-than-expected earnings in Q2 and announced a share buyback programme worth ₹9,300 crore.
The sharp surge in Infosys shares comes a day after the IT major reported revenue growth on the back of $2.7 billion worth large deal wins. The company also raised revenue growth guidance for FY23 to 15-16%, from the 13-15% that it had announced at the end of FY22.
“Infosys' Q2 results were above estimates driven by margin expansion. Deal wins at a seven-quarter high and healthy hiring trends offer comfort on growth,” said a report by Jefferies, maintaining its ‘buy’ rating on the stock, adding that even though its current valuation is at a premium to its 10-year average, the company’s growth outlook justifies it.
Infosys’ revenue growth in constant currency terms came in at 4% sequentially, and 18.8% on a year-on-year basis, in line with analyst expectations. Digital revenues, which account for 61.8% of its total revenues, grew 31.2% year-on-year in constant currency.
Global brokerage Credit Suisse said in a note that the large share of digital services in Infosys’ revenue mix could reduce the impact of the slowdown in IT services growth in FY24 when compared to its peers.
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Overall, Infosys’ revenue grew 6% sequentially to ₹36,358 crore, while net profit surged 12.3% to ₹6,021 crore.
Infosys also announced ₹9,300 crore worth share buyback programme at ₹1,850 per share – this was at a premium of 30% over yesterday’s closing price.
Here’s what brokerages recommend:
Brokerage
Rating
Target price
Upside
Edelweiss Research
Buy
₹1,891
33%
CLSA
Buy
₹1,800
27%
Jefferies
Buy
₹1,700
20%
Credit Suisse
Outperform
₹1,710
20%
Citi
Buy
₹1,685
19%
Nomura
Buy
₹1,640
15%
JP Morgan
Neutral
₹1,600
13%
BofA Securities
Neutral
₹1,535
8%
UBS
Neutral
₹1,490
5%
Note: Upside compared to the closing price of ₹1,419.90 on October 13, 2022
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