Forecast cheer lifts Infosys scrip to record high

Shares of Infosys on Monday touched an all-time high, buoyed by better-than-expected revenue forecasts by the country's second-largest software exporter. The stock rallied as much as 8.2 per cent to a record level of Rs 1,268, its biggest single-day jump in around nine months. Shares of the company finally ended at Rs 1,239, up Rs 67, or six per cent, on the BSE.

Last week, the company said it expected sales to rise between 12 per cent and 14 per cent in dollar terms for the 12 months ending March 2017, surpassing analysts' expectations. Infosys' March quarter numbers, first by an information technology (IT) major, also had a positive impact on stock prices of other tech companies, including Wipro and HCL Technologies.

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"Strong forecast for FY17 revenue means sustained sector-leading growth, which should support premium valuations," said a note by Jefferies, which has a buy rating on the stock. "Client metrics and attrition continued to show steady improvement, with robust deal pipeline and positive commentary on outlook."

Several brokerages increased their price target on the stock following Infosys's results announcement.

Nomura, which increased its price target to Rs 1,315 from Rs 1,270, said, "We continue to believe that Infosys should trade at a premium to TCS, given its better growth."

Infosys's net income rose 16 per cent to Rs 3,600 crore ($540 million) in the three months ended March, the company said. That compares with the Rs 3,520 crore average of estimates compiled by Bloomberg. Sales in the quarter climbed 23 per cent to Rs 16,550 crore compared with analyst projections for Rs 16,480 crore.

Global spending on IT has stalled, with Gartner Inc last week cutting its forecast for this year to $3.5 trillion, which is 0.5 per cent below that for 2015. But Infosys touted several major contract wins in the current quarter, including a deal with food packaging company ConAgra Foods. "The momentum of large deal wins continued this quarter and bookings were strong," chief operating officer U B Pravin Rao said.

Infosys had announced its results on Friday, when Indian markets were shut for a public holiday. Infosys's American Depository Receipts (ADRs) had rallied as much as 11 per cent to $20.5 on Friday.

An ADR is a negotiable certificate issued by a US bank representing a specified number of shares (or one share) in a foreign stock that is traded on a US exchange. ADRs are denominated in dollars, with the underlying security held by a US financial institution overseas.

Bloomberg