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Infosys shares rise over 2% after Q3 profit beats estimates

Infosys shares rose as much as 2.3 per cent in early trade on Friday after the company beat profit estimates in the December quarter. As of 09.25 a.m., Infosys traded 1.9 per cent higher at Rs 3,516 after earlier hitting a high of Rs 3,530.

Infosys shares were the top gainers on the 50-share Nifty benchmark. Infosys earnings had a positive rub-off on other tech stocks, with the broader IT benchmark on the BSE rising 0.8 per cent as against a 0.2 per cent drop in the BSE Sensex.

Infosys on Friday posted consolidated net profit of Rs 2,875 crore on sales of Rs 13,026 crore for the October-to-December quarter. Brokers polled by NDTV had expected India's second biggest outsourcer to report net profit of Rs 2,786 crore on sales of Rs 13,063 crore.

Ebit, or operating margins, rose to 25 per cent against estimates of 24.1 per cent. Dollar revenues, the most important number for IT companies, came in at $2100 million, Infosys said. Analysts had expected the company to clock $2109 million in the December quarter.

However, the company upped its annual sales outlook ahead of Street estimates. Infosys said it will grow at 11.5 to 12 per cent during 2013-14 versus its earlier estimate of 9-10 per cent. Analysts had estimated the company to raise guidance to 10-12 per cent.

Analysts were mixed in their verdict on Infosys earnings. Ambareesh Baliga of Edelweiss Global Wealth told NDTV that Infosys margin expansion has been lower than expected and the revised dollar revenue guidance is in line with estimates.

"There are no major positive surprises in the results," he added.

However, Gautam Chhaochharia of UBS said Infosys margins have surprised positively. Cost reduction is having bigger impact on margins in our view, he added.

Sanjeev Hota of Sharekhan told NDTV that Infosys has met expectations on most of the counts and the management is sounding confident after 4-5 quarters. "The positive commentary is an important aspect of the earnings," he added.

Deven Choksey said Infosys Q3 is in line with expectations. FY15 guidance could be revised to 13 to 15 per cent, he added. "The stock is trading at a discount so buy on dips for 20 per cent upside," he added.

However, technical analyst Rajat Bose said investors should sell Infosys. "The stock is rangebound and good news is priced in. Infosys has strong resistance at Rs 3,478," he added.