Infosys market-cap nears Rs 5-trillion ahead of September quarter results


Analysts expect Infosys to raise its FY21 guidance to 1-3 per cent growth from 0-2 per cent.

Shares of Infosys hit a fresh record high of Rs 1,164.70, up 3 per cent on the BSE on Tuesday, on expectation that the company may raise its FY21 revenue growth guidance while announcing its July-September quarter (Q2FY21) results tomorrow. The information technology (IT) bellwether is set to become the fifth company to touch market capitalisation of Rs 5-trillion.

At 02:46 pm, the market capitalisation (market-cap) of Infosys stood at Rs 4.95 trillion, 1 per cent away from the Rs 5-trillion mark. Currently, Reliance Industries leads the pack with Rs 15.4 trillion market-cap, followed by Tata Consultancy Services (Rs 10.61 trillion), HDFC Bank (Rs 6.6 trillion) and Hindustan Unilever (Rs 5.02 trillion), BSE data shows.

In the past month, Infosys has outperformed the market by surging 23 per cent, as compared to 4.5 per cent rise in the S&P BSE Sensex. In the last three months, it has rallied 46 per cent, against 11 per cent gain in the benchmark index.

IT companies are expected to post healthy numbers for the second quarter of the fiscal year 2020-21 (Q2FY21) owing to multiple tailwinds such as strong deal flow, traction in digital technologies, and resolution of supply-side issues as the quarter witnessed easing of Covid-19-induced lockdowns in many countries.

Further, encouraging management commentary by Accenture recently as well as HCL Tech’s mid-quarter upward revision in revenue and earnings before interest, and tax (EBIT) margin guidance, also point towards a strong performance by the IT companies. That apart, cost rationalisation, lower travel cost, cross-currency benefits, according to analysts, are also expected to drive operating margins of the companies for the quarter under review, Business Standard reported.

Analysts at HSBC Securities expect Infosys to continue to outperform TCS on growth; the brokerage firm assume 2.5 per cent constant currency (CC) sequential growth driven by strong deal wins over the past 3-4 quarters and resilient sub-segment mix. 3Q is likely to be strongest for Infosys due to the ramp-up of the Vanguard deal.

“We expect Infosys to raise its FY21 guidance to 1-3 per cent growth (from 0-2 per cent). No change in guidance could be a slight negative surprise for investorsi n light of the recent re-rating of the sector. We forecast a 100bps margin increase, led by operational gains and lower costs (e.g. Variablepay), partially offset by strong INR,” the brokerage firm said.

Analysts at Prabhudas Lilladher also expect Infosys to raise FY2021E revenue growth guidance between 1-3 per cent from 0-2 per cent earlier, led by strong demand, strong revenue & margin performance.

“We expect 3.4 per cent quarter on quarter (QoQ) CC growth which will be led by strong pick up from Vanguard deal, strong come back from all verticals (BFSI, Retail, Communication), Ramp up of last sign deals,” the brokerage firm said in Q2FY21 earnings preview.

“We expect margins to be at 23 per cent led by strong revenue growth. We expect strong pick up in TCV & strong commentary for deal pipeline. We expect investor to focus on longer term implications from COVID19, revenue & margin outlook, update on pricing, revenue conversion of past deals, view on IT spending and demand pick up across vertical”, it said.

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25 Oct 2020, 9:56 AM (GMT)

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