Published on 13/01/2020 10:20:58 AM | Source: Live Mint

Infosys shares surge on strong Q3, clean chit to top management

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Infosys shares zoomed 3.93% to ₹767.30 after India's second biggest IT company delivered a better-than-expected Q3 performance. Infosys also said it found no evidence of financial misconduct by its executives following a investigation into whistleblower complaints. Infosys raised its revenue forecasts due to upbeat demand. The company earlier said it expected revenue to grow between 10% and 10.5% on a constant currency basis in the year ending March 2020, compared with its previous forecast of between 9% and 10%.

Infosys said it signed large deals worth $1.8 billion in the quarter to December, a factor that helped the company post a 23.5% rise in net profit to ₹4,457 crore, beating the Street's expectations. Analysts polled by Reuters had expected Infosys to post a profit of ₹4,206 crore. Sales were 7.9% higher at ₹23,092 crore. The company's digital offerings now account for 40.8% of its overall revenues, it said.

"The continued strength in large deal wins despite a cautious environment and the revenue growth guidance upgrade have meaningful undertones," domestic brokerage Motilal Oswal said in a note.

The brokerage rates Infosys shares as "Buy" with target price of ₹870. Motilal Oswal expects the valuation gap between TCS and Infosys to narrow.

"As the whistleblower-related overhang is now behind and with expectations of a growth outperformance (v/s TCS), we expect slight re-rating in one-year forward P/E to 18 time, as the discount (v/s TCS) reverts to normalized levels," the brokerage added. (With Agency Inputs)