Infosys Likely to Hit ₹ 1,400 in 12 Months; Buy on Every Fall
IT major’s stock set to re-enter lifetime high territory
Mumbai: Going by the 8% jump in Infosys’ American Depositary Receipts on Friday, shares of the IT major are set to see a gap-up opening today due to its upbeat revenue guidance and the increase in target price by several leading brokerages in the range of 0.8% to 9.6%. A jump of 8% would imply that the stock would open around ₹ 1,270 levels, a new life-time high.
“Fundamentally, Infosys is growing faster than the industry average. It is the bellwether now for investing in India,” Dipen Sheth, head - institutional research at HDFC Securities, said in an interview with ET Now and maintains a 12-month target price of ₹ 1,400.
Indian markets were shut on Friday, when the company reported strong operating margin performance for the March quarter and guided for above industry revenue growth. Infosys expects its dollar denominated revenue to grow 11.8-13.8% for FY17.
“From the returns point of view, the stock will be a market performer but relative to the large-cap IT peers, we have seen Infosys turn around and see much improvement in performance in the last few quarters. It is now regaining its mojo and it would be our top pick in the large-cap IT space,” said Amar Ambani, head of research at IIFL.
As investors get more confident about Infosys’ future prospects, the stock is likely to witness a PE multiple re-rating, Sagar Rastogi, research analyst at Ambit Capital said. “The thesis that the company will keep accelerating revenue growth without compromising on margins or cash flows is bearing fruit. It is at a slight discount to TCS but that should close going ahead,” he said. Rastogi has a ‘buy’ rating with a target price of ₹ 1,450 on Infosys.
April month options data for Infosys shows concentration of open interest at
₹ 1,200-1,300 strikes among call options. Analysts believe the stock is likely to face immediate hurdle near ₹ 1,300.
On April 4, the stock touched a life high of ₹ 1,248. It has fallen nearly 6% since, and ended at ₹ 1,176 on Wednesday. “The stock has corrected from its lifetime highs touched couple of days ago but the major trend is positive. We have seen fresh put writing at ₹ 1,100-1,120 strikes and because of that downside seems to be limited,” said Chandan Taparia, analyst at Anand Rathi Financial Services.