Infosys rallies 9% post Q2 earnings; stock hits new high

Analysts at Barclays maintain overweight rating on the stock and increased price target of Rs 4,650.

Infosys is trading higher by nearly 2% at Rs 3,952, extending its Friday’s nearly 7% rally, after the company reported a better-than-expected consolidated net profit at Rs 3,096 crore for the second quarter ended September 30, 2014 (Q2) besides declaring 1:1 bonus.

The stock opened at Rs 3,898 and hit new high of Rs 3,959 on National Stock Exchange (NSE). A combined 1.92 million shares changed hands on the counter so far on NSE and BSE.

In his first investor interaction, Infosys Chief Executive Officer & Managing Director, Dr. Vishal Sikka re-affirmed revenue growth should return to the industry levels by FY17.

The aim would be to become the next generation services company with 15-18% USD revenue growth and 25-28% EBIT margins longer term, he had said.

Despite the run up already seen in the stock, analysts remain bullish on the counter. Bhuvnesh Singh and Hitesh Da, analysts at Barclays maintain overweight rating on the stock and have revised price target to Rs 4,650.

“While details of the new strategy should emerge over the next few months, we believe that the new CEO's plan to embrace newer technologies such as automation and AI to drive growth is a step in the right direction,” analysts said in research report.



With the ask rate for meeting FY15 revenue guidance expanding to 1.4-3.8%, we do not expect any negative surprises on this front and believe that investors would focus on management's plan of action on executing the new strategy, the report suggests.