Shares of Infosys Ltd. surged as analysts bet on a potential margin recovery by the next fiscal.
“Strong margin performance and incremental levers raise confidence on margin recovery,” said Nomura in its investor note dated Oct. 13. “Falling attrition (-130 bps q-o-q) to 27.1%, ongoing pyramid optimisation and falling sub-con expenses should aid in further margin improvement in fiscal 2024.”
Infosys reported an EBIT margin of 21.5% in the quarter that ended Sept. 30, compared with 20% in the previous three months.The software services exporter posted a 6% sequential increase in its July-August revenue, and raised the revenue guidance for FY23 to 15-16% from 14-16% projected earlier.
The company expects operating margin in the 21-22% range, lower than the 21-23% projected earlier. Separately, Infosys said it has approved a proposal to buy back equity shares worth Rs 9,300 crore. It will repurchase 5,02,70,270 equity shares, representing 1.19% of the total paid-up share capital.
Infosys Q2 Results 2022-23: Key Highlights (QoQ) Revenue in U.S. dollar terms rose 2.5% to $4,555 million. Revenue growth in constant currency terms stood at 4%. Net profit rose 12% to Rs 6,021 crore. Operating profit rose 14% to Rs 7,873 crore. EBIT margin stood at 21.5% compared with 20% in Q1.
The stock rose as much as 4.58% intraday on Friday. The results were announced after the market hours on Thursday. The total traded volume was 3.5 times the 30-day average so far in the trading day. Of the 48 analysts tracking the company, 41 maintain a ‘buy’, five suggest a ‘hold’ and two recommend a ‘sell’, according to Bloomberg data. The 12-month consensus price target implies an upside of 16