Infosys on TCS? What brokerages say after second quarter results

The IT major raised its revenue growth forecast for the current fiscal to 16.5-17.5 per cent in constant currency (CC) terms from an earlier estimate of 14-16%. It maintained its margin forecast for FY22 at 24% from 22%.

According to analysts, the increase in revenue growth guidance has come as a positive surprise. “We see scope for beat and growth in the next two quarters as INFO benefits from better big deal focus and tailwinds,” Motilal Oswal said in a note.

As it continues to see Infosys as a key beneficiary of the boom in IT spending, given its capabilities around cloud and digital transformation, the brokerage has reiterated its ‘Buy’ rating with a target price. ₹1,960 per share. Motilal said its relative preference for Infosys TCS It is based on its headroom to enhance its growth prospects, which is further strengthened by this result.

TCS share price has fallen 5% in the past five trading sessions after India’s top IT company missed its revenue and margin estimates last week.

Infosys continues to be the top buy of ICICI Securities. “Normal weather is expected for the December quarter as Infosys and Mindtree have hinted at the possibility of furloughs. Like in the case of TCS, the TCV of the deal has seen a decline (QoQ) for all three,” ICICI Securities said in the note.

The Bengaluru-based firm said major deal signings for the quarter ended September 30 stood at $2.15 billion, with 22 major deals signed during the quarter. Analysts at Emkay said the deal pipeline remains healthy, offering good revenue visibility with a good mix of new and renewal deals.

“Broad-based revenue growth, upward revision in fiscal 2012 revenue growth guidance, healthy deal intake, margin flexibility. However, we did not like the spike in the accident,” he said in a note.

Emkay maintains its ‘Buy’ stance on Infosys with a target price of Rs. ₹1,910 given strong earnings momentum and a strong demand environment.

Infosys’ broad-based growth was driven by strong revenue contribution across verticals and geographies and customer adoption of digital transformation. Its dollar revenue rose to $3.9 billion, driven by big deal wins and accelerated digital initiatives from customers.

“Overall Infosys has reported better than expected numbers especially on the revenue growth front. Post Q2FY22 numbers, we maintain our positive outlook with Infosys price target ₹2016,” said Jyoti Roy – DVP- Equity Strategist, Angel One.

The views and recommendations given above are those of individual analysts or broking companies and not of Mint.