Infosys nears three-year high

In past one month, the stock has rallied 12.5% as compared to 6.2% rise in benchmark index.

Infosys has moved higher by nearly 3% at Rs 3,397, its highest level since January 12, 2011, on the National Stock Exchange (NSE).

The stock opened at Rs 3,321 and hit a low of Rs 3,314 in early morning deals on the NSE. A combined around 560,000 shares have already changed hands on the counter till 1240 hours on BSE and NSE.

The stock has rallied nearly 4% in the past two trading sessions, after the New Jersey-based leading IT services firm Cognizant Technology Solutions Corp on Tuesday, raised its full-year forecast for both profit and revenue while announcing its Q3 result September 2013 results.

For 2013, it now expects revenue to be at least $8.84 billion, a growth of at least 20.3% over 2012. The company had given a guidance of 19% growth in revenue ($8.74 billion) compared to 2012.

Meanwhile, Infosys has outperformed the market by surging 12.5% in past one month from Rs 3,020 on October 7, as compared to 6.2% rise in benchmark index.

Most analysts maintain “BUY” rating on the stock.

“Infosys has taken multiple steps in recent past to fix some of the ailing policies including iRACE. We see this as another positive development that will improve delivery and curtail attrition,” says an analyst with Prabhudas Lilladher in a report dated October 28.

“Infosys is likely to deliver FY13-15 USD revenue CAGR of around 12 per cent, which is closer to industry average as deal signings improve. There can be around 175 bps (basis point) expansion in operating margin from bottom due to increasing growth, favourable currency and cost efficiencies. The stock might fetch 15-20 per cent in one year with target price of Rs 3750,” points out an analyst at Motilal Oswal research.

Vivek Mahajan, head of research at Aditya Birla Money is also bullish on Infosys in the IT pack. “Currently, Infosys is trading 1.5x on FY15(e) EPS, which is at 17 per cent discount to the market leader TCS. We believe that the relatively lower valuation and recent under-performance makes the stock attractive. We expect the valuation gap to reduce in the medium term," he says. Besides, he also recommends buying ITC in the FMCG pack at the current levels with a one-year horizon for a 15 – 20 per cent return.

In the IT pack, analysts at IIFL maintain a ‘buy’ rating on Infosys and Wipro for a target of Rs 3,744 and Rs 576, respectively over the next six – nine months.