Brokerages Bet Big on Infosys, Shares Extend Gains on Q3

Infosys shares gained over 3 per cent on Friday, buoyed by strong December quarter results. Infosys was headed for its third straight day of gains.

Infosys on Thursday beat Q3 estimates by posting 0.6 per cent sequential growth in dollar revenues. The IT major also raised its annual revenue outlook for the first time in many years.

Analysts now expect robust performance from Infosys in the current March quarter in which the outsourcer has traditionally slipped over the last few years. Infosys' revised 2015-16 constant currency growth guidance of 12.8-13.2 per cent implies 1-2.5 per cent sequential growth in the March quarter.

Credit Suisse upgraded Infosys to "outperform" from "neutral" and revised its target upwards to Rs 1,400, citing "solid" execution in the December quarter.

Domestic brokerage Prabhudas Lilladher said Infosys remained its top pick. It raised the target price on Infosys to Rs 1,500 from Rs 1,485 earlier.

"Company is driving innovation and automation across all projects and early signs are encouraging. This is resulting in better client engagement, higher ratings on innovation quotient and thus, increasing win rate against competition," said Prabhudas Lilladher.

IDFC Securities said the new initiatives started by CEO Dr Vishal Sikka have started bearing fruit, so Infosys is likely to return to industry leading growth.

"We see Infosys in early earnings upgrade cycle. Also, key metrics indicate structural improvement in business fundamentals. We believe re-rating would continue as growth visibility improves over the next 2-4 quarters," the brokerage said.

IDFC retained its "outperform" rating on Infosys with a 12-month target price of Rs 1,380.

Religare said Infosys reported a good quarter despite multiple headwinds such as higher furloughs, the Chennai flood impact and a high Q2 base.

"Infosys' industry-leading growth is likely to provide room for price earnings expansion over TCS," the brokerage said.

Religare raised its target price on Infosys to Rs 1,300 per share.

Infosys shares traded 1.4 per cent higher at Rs 1,148.85 in a lacklustre market as of 10.15 a.m.