Infosys shares rose over 5 percent on Monday after the IT major reported a 23.7 percent year-on-year (YoY) jump in consolidated net profit, at Rs 4,457 crore, for the third quarter ended December 2019. In the corresponding quarter last year, the company posted a net profit of Rs 3,610 crore. CNBC-TV18 poll had predicted a profit of Rs 4,200 for the quarter under review.
The stock rose as much as 5.3 percent to Rs 777.55 per share on BSE. The stock settled at Rs 773.40, up 4.7 percent as compared to a 0.6 percent rise in BSE Sensex at 41,859.
Infosys' revenue grew 7.9 percent to Rs 23,092 crore in the quarter under review from Rs 21,400 crore in the corresponding period last fiscal, it added. The company has revised upwards its FY 20 revenue guidance in constant currency to 10-10.5 percent, it said.
In US dollars, Infosys net profit grew 24.8 percent to $627 million in the December quarter, while revenues rose 8.6 percent to $3.24 billion. Its total headcount stood at 2,43,454 at the end of December 2019 with an addition of 6,968 people. The attrition rate was at 19.6 percent.
The sentiment was also bullish after a panel that probed whistleblower complaints against top executives of Infosys Technologies said it found no evidence of financial impropriety or misconduct.
The IT services company established a panel to investigate allegations in a letter, claimed to have written by some employees of Infosys last October, that chief executive officer Salil Parekh asked them and others to bypass approvals for large deals. Parekh, the letter said, feared a negative impact on shares from reduced profit.
Most brokerages remain positive on the stock post its earnings numbers. BofAML, Citi, HSBC, and Jefferies were 'buy' on the stock, while UBS, Nomura, and Goldman Sachs had a 'neutral' rating. However, Credit Suisse was the only brokerage that has an 'underperform' rating.
Meanwhile, HSBC, Citi, Kotak, and Nomura also raised their target price for the stock.
As per Kotak, valuation of the stock is attractive at current levels and the company can sustain/exceed peer-level growth with stable margins. Meanwhile, BofAML believes the key negative is the deceleration in financial services.
According to Nomura, Overhang of the whistleblower allegations are behind and the brokerage prefers Infosys over TCS in terms of valuations. Being bullish on the stocks, UBS added that upgraded guidance and investigation outcomes should be well received by the market.
However, Credit Suisse wasn't impressed by the performance. It noted that QoQ performance a tad disappointing given forex tailwind, adding that guidance is also not a major positive as consensus growth target already at 11 percent.
First Published: Jan 13, 2020 9:43 AM IST
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