December 24, 2021 04:18 PM
IT company Infosys became the fourth Indian firm to hit a market capitalization of Rs 8 trillion (lakh crore) as its shares touched an all-time high of Rs 1913 on BSE in early morning.
The scrip was trading at Rs 1866 as of writing, up 0.5% from its previous close. Meanwhile, Sensex fell 0.71% to 56,906.63 points.
Reliance Industries Ltd, Tata Consultancy Services Ltd and HDFC Bank Ltd have achieved this milestone in market capitalization in the past.
Infosys, whose stock has jumped over 52% so far this year, will announce its December quarter earnings on 12 January.
Cloud adoption and digital transformation will support strong demand for IT services over the next 3-5 years, said analysts. Infosys is among the best-positioned companies to benefit from strong demand, backed by its strategic investments in scaling up digital capabilities, winning market share, and expanding presence in Europe, they added.
“Infosys is well-placed to deliver industry-leading organic growth among large peers in the medium term. Margins are expected to remain under pressure due to supply-side challenges, roll-out of wage hike for senior employees, and weak seasonality, which will be partially offset by strong growth in digital business, operational efficiencies, and currency tailwinds,” brokerage firm Sharekhan said in a note to investors.
“The stock trades at 30x/26x its FY2023E/FY2024E earnings, which is justified, given strong growth potential, robust deal pipelines, robust execution, and improving ROCE (return on capital employed). We like Infosys because of its superior digital capability, consistent investments in talents, stable management, a strong capital allocation policy, and a healthy balance sheet,” the note added.
The brokerage firm expects 18.6% year-on-year growth in FY2022 and a 12.4% compound annual rate over FY2022-FY2024E for Infosys, given broad-based demand, robust deal wins, and a healthy deal pipeline.
Last quarter the company increased its FY2022 revenue guidance to 14-16% on a constant currency basis from 12-14% earlier. The firm maintained its operating margins guidance at 22-24%.