Sharekhan is bullish on Infosys and has recommended buy rating on the stock with a target price of Rs 840 in its research report dated April 12, 2019. Infosys would gradually catch up in revenue growth with TCS in FY2020E and in-turn would narrow the valuation gap with TCS going forward, report said. The management cut its EBIT margin guidance to 21-23% for FY2020E. However, strong deal wins, healthy deal pipeline and additional revenue from acquistions would drive the revenue growth in FY2020E.
Clearly, it is advantage TCS over Infosys, Devang Mehta, Head, Equity Advisory, Centrum Wealth Management, said. TCS management sounded more upbeat, the margins probably seem to be stable and or expanding in the coming quarters. Infosys, on the other hand, we will see a margin dip. How the stock price behaves is little difficult to say but clearly, for six months-one year period, what would be a more fertile bet to be would be TCS on the back of good numbers and a very confident management.
The BSE Sensex closed 139 points higher at 38,905.84, whereas Nifty settled 47 points up at 11,690.35 led by gains in auto, IT and banking stocks. Most fertilizer stocks gained after Indian Meteorological Department (IMD) predicted near-normal rains during April-September monsoon, allaying concerns over rise in inflation. Moreover, positive cues from US-China trade talks, strong Chinese export data and hopes of better fourth-quarter earnings kept mood positive.
Investors should stay away from Infosys as the IT major may feel some pain in the short-term, said Deepak Jasani, head-retail research of HDFC Securities, told CNBC-TV18 in an interview on Monday. “Infosys is quoting at a cheaper P/E compared to TCS, for people who are willing to wait out for two to three quarters, for them it is a good time to start accumulating the stock,” Jasani added.
Motilal Oswal Securities has a buy call on Infosys with a 1-year target price of Rs 860. The current market price of Infosys is Rs 725.40. Guidance for 7.5-9.5% revenue growth (in constant currency terms) for FY20 appears conservative and is almost similar to that of FY19. However, with a robust performance on deal wins, Infosys’s revenue momentum is catching up with leading peers such as TCS.
Shares of Infosys Ltd on Monday fell as much as 4.6% to Rs 713.70, their steepest fall in six months since October 11, 2018, after many brokerages downgraded the stock on a disappointing revenue forecast. The company said revenue will increase 7.5%- 9.5% in constant currency terms for the year ending March 2020. It forecast an operating margin of 21% to 23% for fiscal year 2020 estimates, from an earlier guidance of 22-24% for fiscal year 2019.
Infosys reported a 19.11% year-on-year jump in net sales for the fourth-quarter at Rs 21,539 crore as against Rs 18,083.00 crore in March 2018. Net Profit for the quarter stood at Rs 4,074.00 crore in March 2019, up 10.41% from Rs 3,690.00 crore in March 2018. However, Infosys EPS has decreased to Rs. 9.37 in March 2019 from Rs. 16.98 in March 2018. EBITDA was at Rs. 5,814.00 crore in March 2019 up 6.41% from Rs. 5,464.00 crore in March 2018.
Information technology major Infosys is considering multiple measures including incentives and better employee engagement to bring down the attrition rate that hit 20% in the fourth quarter of FY19. Attrition has increased from 16.6% in the quarter ended March 2018 to 18.3% in quarter ended March 2019. The company is focusing on creating better career opportunities and also milestone-based increments for employees.
The Indian market is set for a negative start on Friday as investors remain cautious ahead of key inflation numbers and March-quarter earnings. IT majors TCS and Infosys reporting their results today. Jet Airways abruptly suspended all international operations on Thursday and did not issue a prior notice to passengers for cancellations. Etihad Airways has submitted its bid for the airline.
Infosys Ltd, India's second-biggest IT services company, said on Thursday it would buy a 75% stake in ABN AMRO Group NV's mortgage administration services unit for 127.5 million euros ($143.53 million). Infosys will acquire the stake in Stater N.V. through unit Infosys Consulting Pvt Ltd and the transaction is expected to close in the first quarter of fiscal 2020. ABN AMRO will continue to hold the remaining 25% stake in Stater, which operates in the Netherlands, Belgium and Germany.