Infosys gains 4% ahead of September quarter results

Shares of Infosys were up 4 per cent at Rs 813 on the BSE in the intra-day deals on Friday ahead of July-September quarter (Q2FY20) results announcement due later in the day.

In the past three months, post June quarter (Q1FY20) results, Infosys has outperformed the market by surging 13 per cent, after the company had raised its FY20 revenue guidance from 7.5-9.5 per cent to 8.5-10 per cent in constant currency (CC) terms. In comparison, the S&P BSE Sensex lost 1.4 per cent during the same period.

Analysts believe the IT major would further revise its guidance upward for FY20 in view of the revenue visibility ahead.  The Bengaluru-headquartered IT company, as per analysts, remains on a firm footing given the recent deal momentum, strong positioning in clients and favourable arithmetic (revised guidance implies a 1-2 per cent compounded quarterly growth rate through Q2-Q4FY20) – hence creating the room for more upgrades.

The brokerage firm Antique Stock Broking expects Infosys to revise its FY20 guidance upwards to 9-11 per cent (from 7.5-9.5 per cent).

“The macro environment (US economic outlook) has been volatile after a strong FY19. Slowdown in global economy, if any, can be a concern for FY20/FY21 growth rates. Some of the companies have started highlighting client-specific or industry-specific challenges and that has started to impact revenue growth. Additionally, currency (FY19: 8.4 per cent depreciation) which acted as a margin lever in FY19 may act as a marginal headwind in FY20 and may keep margins under pressure,” the brokerage firm said in an earnings preview of the IT sector.

“We expect revenue guidance to improve for Infosys led by strong past large deal wins which helps to provide visibility ahead. Infosys to raise its guidance to 9-10 per cent from (8.5-10 per cent YoY) for FY20E CC terms,” analysts at Prabhudas Lilladher said in an earning preview note. 

“Strong revenue growth in Infosys will be aided by ramp up of deals and broad-based growth. We expect Infosys to post a well-balanced broad based growth in Q2FY20E led by large deal ramp up and revenue growth will also be aided by Starter NV deal (50bps)”, it added.

At 10:36 am, Infosys was trading 3 per cent higher at Rs 806 on the BSE, against 0.61 per cent rise in the benchmark index. A combined 7.4 million equity shares changed hands on the counter on the NSE and BSE.