Brokerages unanimous on Infy's prospects, maintain 'buy' call

Most brokerages maintained positive stance on India's second largest IT services provider Infosys after its second quarter result. They were enthused by Infosys' large deal wins and positive revenue growth even as margins disappointed. CLSA, Jefferies, Antique Stock Broking, JM Financial, SBICAP Securities, Sharekhan and Motilal Oswal maintained 'buy' ratings. Shares of Infosys ended up 1.2 per cent at Rs 704.50 after rising as much as 3.5 per cent during the day. Infosys reported revenues of $2.92 billion for the second quarter, up 4.2 per cent sequentially in constant currency terms. The company's net profit stood at $581 million, up 0.5 per cent on a sequential basis. It won over $2 billion in new deals during the quarter.

"Infosys positively surprised the street by surpassing TCS on revenue front, while robust deal wins signify improving revenue visibility," said Reliance Securities. "Despite subdued margin expansion, we expect accelerated business-related investments to sustain revenue growth, which will eventually drive margin."


IDFC Secuities said strong deal wins give greater confidence on acceleration in growth from FY19 to FY20.

For Jefferies, Infosys remains a preferred pick among top-tier IT services companies, given improving growth outlook and reasonable valuation. Nomura also said that the second quarter result was better on revenue growth and deal wins front but no increase in EBIT (earnings before interest and tax) margin guidance as a key negative. It has a reduce rating on Infosys.