Infosys hits 52-week high, rises 5% in three days; stock nears record high

Infosys share price today: Infosys share price today hit a 52-week high of Rs 1,950.20 as it climbed 3 per cent on the BSE in Wednesday's intraday trade. Infosys share price extended its rally into the third day on a report that the government is likely to retract its tax demand worth $4 billion.

Authorities, last month, ordered Infosys to pay an additional amount, arguing that its overseas offices should pay goods and services tax (GST) dating back to 2017.

The GST Council, composed of state finance ministers and chaired by the federal finance minister, will probably make a formal decision on September 9,  Reuters reported quoting sources. CLICK HERE FOR FULL REPORT

On the bourses, Infosys share price has rallied 5 per cent in the past three trading days. The stock has surpassed its previous high of Rs 1,903 touched on July 29, 2024. It is trading close to its record high of Rs 1,953.70 touched on January 17, 2022.

In the April to June quarter (Q1FY25), Infosys reported a strong performance with a revenue of $ 4,714 million, up 3.6 per cent Q-o-Q/2.5 per cent Y-o-Y in constant currency (CC) terms. Earnings before interest and tax (Ebit) margin was up 100 bps Q-o-Q to 21.1 per cent, aided by 100 bps from the absence of one-off items of the previous quarter, 80 bps benefit from Project Maximus and a 40-bps benefit from improved realisations which were partly offset by headwinds of 120 bps from higher variable pay & leave cost.

It won a record 34 large deals in a single quarter while large deal total contract value (TCV) came at $4.1 billion (57.6 per cent net new).

Recovery in the discretionary demand could drive marked improvement in Infosys' growth, going forward, according to analysts.

"On the back of a broad-based growth coupled with improvements in the US financial services, integration of in-Tech, and strong large deal closures, the company has revised its revenue growth guidance for FY25 to 3-4 per cent in CC terms (vs 1-3 per cent guided previously). On the margins front, the company maintained its guidance margins in the band of 20-22 per cent, with headwind of wage hike likely to impact margins in H2, in our view," said analysts at ICICI Securities.

Cash conversion (OCF/Ebitdawas ~73 per cent over FY19-24), healthy return ratios and payout provide cushion. Continued ramp-up of deal wins and improvement in discretionary spending are key upside risks while delay in decision-making is a key downside risk, said analysts at IndCred Equities.

Analysts at Centrum Broking, meanwhile, said the overall Q1FY25 performance was above expectation.

"There are near term challenges in the demand environment as discretionary spending by clients remains weak. However, there are signs of improvement in the US BFSI space. We increase our target PE multiple from 21x to 24x to account for increased guidance for FY25E and green shoots in demand environment," it said.