Infosys shares surge after Q2 results, ₹9,300 crore buyback announcement

• Infosys share price surged over 4% in early trade, after the company’s Q2 show and revised FY23 guidance.
• Infosys also announced ₹9,300 crore worth share buyback programme, offering a 30% premium over October 13’s closing price.
• Infy’s commentary has also resulted in brokerages increasing the stock’s target price with an upside of up to 33%.

IT major Infosys’ shares surged by over 4% in early trade today after the company reported better-than-expected earnings in Q2 and announced a share buyback programme worth ₹9,300 crore.

The sharp surge in Infosys shares comes a day after the IT major reported revenue growth on the back of $2.7 billion worth large deal wins. The company also raised revenue growth guidance for FY23 to 15-16%, from the 13-15% that it had announced at the end of FY22.

“Infosys' Q2 results were above estimates driven by margin expansion. Deal wins at a seven-quarter high and healthy hiring trends offer comfort on growth,” said a report by Jefferies, maintaining its ‘buy’ rating on the stock, adding that even though its current valuation is at a premium to its 10-year average, the company’s growth outlook justifies it.

Infosys’ revenue growth in constant currency terms came in at 4% sequentially, and 18.8% on a year-on-year basis, in line with analyst expectations. Digital revenues, which account for 61.8% of its total revenues, grew 31.2% year-on-year in constant currency.

Global brokerage Credit Suisse said in a note that the large share of digital services in Infosys’ revenue mix could reduce the impact of the slowdown in IT services growth in FY24 when compared to its peers.

Overall, Infosys’ revenue grew 6% sequentially to ₹36,358 crore, while net profit surged 12.3% to ₹6,021 crore.

Infosys also announced ₹9,300 crore worth share buyback programme at ₹1,850 per share – this was at a premium of 30% over yesterday’s closing price.

Here’s what brokerages recommend:


Note: Upside compared to the closing price of ₹1,419.90 on October 13, 2022

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