Infosys dips 5% on profit booking post stellar December quarter results

Shares of Infosys dipped 5 per cent to Rs 1,318 on the BSE in the early morning trade on Thursday on profit booking after the information technology (IT) bellwether raised its fiscal 2020-21 (FY21) revenue guidance from 2-3 per cent to 4.5-5 per cent in constant currency while FY21 operating margin guidance was revised upward from 21-23 per cent to 24-24.5 per cent on the back of continued strong performance.

Despite today's fall, in the past one month, Infosys has outperformed the market by surging 16 per cent, as compared to a 7 per cent rise in the S&P BSE Sensex.

Infosys reported healthy October-December quarter (Q3FY21) results. Dollar revenues increased 5.3 per cent quarter on quarter (QoQ) in constant currency terms. The company also reported flat QoQ margins despite headwinds of large deal transition cost and higher sub con cost. READ ABOUT IT HERE

Analysts at ICICI Securities expect Infosys to be a key beneficiary of multi-year growth in digital technology considering its digital prowess and ability to provide end-to-end solutions. This, coupled with increase in outsourcing in US and Europe, vendor consolidation opportunities, captive carve outs and cost take out deals will further boost its revenues.

"In addition, healthy deal wins are expected to help the company make steady improvement in financials in coming quarters. Infosys has consistently outperformed TCS over the past few quarters and also narrowed the margin gap between the two companies. Hence, we remain positive on the stock," the brokerage firm said in a note.

"As Infosys has outperformed Tata Consultancy Services (TCS) during April-December 2020 (9MFY21) and is on its way for industry leading performance in FY21 (among Tier I players), we expect the valuation divergence to narrow," Motilal Oswal Finanical Services said in result update.

At 09:42 am, Infosys was trading 3 per cent lower at Rs 1,348, as compared to a 0.41 per cent decline in the S&P BSE Sensex. The counter has seen huge trading activities, with volumes more-than-doubling in the first half-an-hour of trade. A combined around 9.5 million equity shares had changed hands on the counter on the NSE and BSE till the time of writing of this report.