Analysts upgrade Infosys on Q3 surprise

Mumbai: shares rallied nearly 2% on Thursday as brokerages maintained their bullish stance on the company after it surprised the Street positively and raised FY22 revenue growth guidance by 250-300 bps to 19.5-20%.

Almost all the brokerages have raised their EPS estimates and target prices by an average of 6% after the December quarter results.

Morgan Stanley has hiked its target price on the stock to ₹2,250 from ₹2,110 and revised its EPS estimates upward by 2-3% for FY22-24.

"Revenue growth surprised the most amongst peers, margin pressures incrementally appear to be easing while the management commentary pointed to continued momentum in FY23," Morgan Stanley said in a note. "Considering Infosys' share price was already strong, and Q3 results are solid, the stock should further close the valuation gap with TCS."

Jefferies, while raising its target price to ₹2,270 from ₹2,200, said that Infosys' third-quarter earnings surprised positively, mainly led by its 7% quarter-on-quarter revenue growth. "We believe the current technology wave is the biggest in history and that consensus and companies will keep upgrading numbers and guidance like last year. In the long term, earnings growth will outpace revenue growth, as seen in the FY09-FY16 tech upcycle," the firm said.

Edelweiss, in a note, said that the company would achieve 50-100 basis points above its upper end of the guided range.

Credit Suisse has increased its EPS estimates by 2% for FY22 and 4% for FY23 and raised its price target from ₹2,250 to ₹2,350.