Infosys hits record high on robust revenue guidance; zooms 103% in one year

Shares of Infosys hit a fresh record high of Rs 1,597.25, up 1.3 per cent on the BSE in the intra-day trade on Thursday, after the country’s second-largest information technology (IT) services player on Wednesday raised its revenue growth guidance for financial year 2021-22 (FY22) buoyed by a robust deal pipeline.

The stock surpassed its previous high of Rs 1,590.85 touched on June 30, 2021. In the past one year, Infosys has outperformed the market by zooming 103 per cent, as compared to a 47 per cent rally in the S&P BSE Sensex.

Infosys now expects its revenue to grow by 14-16 per cent in FY22, up from the earlier estimate of 12-14 per cent. This guidance is ahead of the one-percentage point increase analysts were estimating. The company, however, maintained margin guidance at 22-24 per cent in FY22.

Analysts at Motilal Oswal Securities expect Infosys to deliver another year of an ongoing guidance raise as the current one does not fully factor in strong technology demand and execution of its record high deal wins.

"We have cut our FY22E/FY23E EPS estimate by 3.2 per cent/1.6 per cent to encompass margin pressure due to ongoing supply crunch in the industry and expected increase in travel expenses. We continue to view Infosys as a key beneficiary of a recovery in IT spends in FY22, given its capabilities around Cloud and Digital transformation," the brokerage firm said in Q1FY22 result update.

For the quarter ended June 2021 (Q1FY22), Infosys reported a consolidated net profit of Rs 5,195 crore, up 22.7 per cent year-on-year (YoY) and 2.3 per cent sequentially. The firm’s revenue grew 17.9 per cent to Rs 27,896 crore on a YoY basis, while it rose 6 per cent compared to the previous quarter. Its US dollar revenue grew at 4.7 per cent sequentially to $3.78 billion. In constant currency terms, it was up 4.8 per cent.

The company said its June-quarter revenue growth was the fastest over the last decade. Meanwhile, its total contract value (TCV) of large deals was $2.6 billion during the quarter.

Infosys is one of the leading IT players catering to BFSI (Banking, Financial Services and Insurance), retail, communication, manufacturing & hi-tech verticals. The company generates more than 50 per cent of its revenues from digital technologies.

"Infosys is a key beneficiary of multi-year growth (15-20 per cent) in digital technologies. Increase in outsourcing in Europe, vendor consolidation and large deal pipeline other key growth drivers. Infosys to post industry leading growth in revenues (CAGR of 16 per cent in FY21-23E). Healthy cash generation, robust dividend distribution & buyback," Devang Bhatt, research analyst at ICICI Securities said in a stock update.