Infosys hits record high in subdued market, up 11% in 7 days post Q1 nos

Infosys shares hit an all-time high of Rs 804 apiece, up 2 per cent, in intra-day trade on the BSE on Tuesday in an otherwise subdued market. The stock surpassed its previous high of Rs 799 touched on July 18, and crossed the share buyback price of Rs 800 per share.

In the past seven trading days, the stock has outpaced the market by surging 11 per cent on upward revision of the revenue guidance in constant currency terms for the financial year 2019-20 (FY20) to 8.5-10 per cent from 7.5-9.5 per cent as guided earlier. In comparison, the S&P BSE Sensex was down 2 per cent during the same period.

While announcing the June quarter results, the information technology (IT) company said that with effect from the current financial year, the company expected to return approximately 85 per cent of the free cash flow cumulatively over a 5-year period through a combination of semi-annual dividends and/or share buyback and/or special dividends, subject to applicable laws and requisite approvals, if any.

Analysts believe that the revised revenue guidance reflected healthy visibility – at least for the near term, which should help it deliver double-digit growth for the fiscal.

"We expect the confident outlook plus an increased pay-out (85 per cent of free cash flow vs. 70 per cent earlier) should help Infosys narrow the 20 per cent PER gap vs. Tata Consultancy Services (TCS). The on-going share buyback also lends support," analysts at JM Financials said in a company update.

“We note the contrast in Infosys’s Q1FY20 performance to that of TCS – where near-term revenue visibility remained suspect and the growth performance was lopsided in favour of two verticals. Given this – and with payouts converged too – the case for narrowing of the valuation gap gets stronger,” analysts at Motilal Oswal Securities said in their result update. The brokerage firm maintains ‘buy’ rating on the stock with target price of Rs 840 per share.

Infosys commenced buyback of Rs 8,260 crore through the open market route on March 20. The company had bought back shares worth Rs 5,934 crore till July 12.

At 02:19 pm, Infosys was trading 1.5 per cent higher at Rs 797 on the BSE, as compared to a 0.48 per cent rise in the S&P BSE Sensex. A combined 7.2 million shares have changed hands on the counter on the NSE and BSE so far.