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10 reasons why Infosys shares are up 17%

Infosys shares jumped over 17 per cent on Friday after India's second-largest software services provider beat estimates in the third quarter ending December. Infosys was the top gainer on the 50-share Nifty and its outperformance lifted market sentiments.
Here are 10 reasons for the sharp gain in the stock price:
  1. Infosys net profit at Rs 2,369 crore in the December quarter was flat against Rs 2,370 crore in the September quarter, but much better than the average estimate of Rs 2,100 crore in a poll of 16 analysts, according to Thomson Reuters.

  2. Infosys said revenue rose 12 per cent in October-December to Rs 10,424 crore from Rs 9,300 crore a year earlier. That compares with analyst estimates of Rs 9,680 crore.

  3. Dollar revenues for the December quarter stood at $1.91 billion against $1.79 billion in the previous quarter and better than estimates of $1.87 billion.

  4. The biggest positive for the stock was the upward revision announced in the full year dollar sales forecast. Infosys said FY13 revenue forecast is seen at $7.45 billion, which is better than $7.34 billion projected by the management earlier. The new guidance implies 6.5 per cent growth year-on-year and includes Lodestone's revenues.

  5. Earnings per share for the full fiscal are likely to be Rs 162.80, a 10.4 per cent jump over the year ago period.

  6. Infosys maintained margins despite higher operating costs. EBIT or operating margins declined to 25.69 per cent against 26.3 per cent in the September quarter, but better than estimates of 25.5 per cent. Margins declined on account of wage hikes.

  7. Infosys managed to post 2 per cent sequential growth in volumes though the biggest surprise was the pick-up in pricing, which rose 3.7 per cent. Utilization rate rose to 70.1 per cent against 69.60 per cent.

  8. Management sounded optimistic: S. D. Shibulal, CEO and managing director of Infosys said the company has done well in this quarter despite an uncertain environment. "We continue to gain confidence from a strong pipeline of large deals. However, the broader economic environment remains difficult. Even so, we remain cautiously optimistic about the January-March quarter", he added.

  9. Analysts said the worst might be over for Infosys. "This is a very credible performance. Infosys has exceeded our estimates at the bottom line by 4-5 per cent and they have done this after 4-5 quarter... so, kudos to the management. The combine of a beat on actual Q3 numbers and upbeat guidance should reflect in our and most brokerage estimates going upwards," Saurabh Mukherjee of Ambit told NDTV Profit.

  10. Brokers were upbeat: Kotak said Infosys had reported an excellent quarter with organic growth beating expectations. Nomura said Q3 revenues were very impressive and organic growth guidance not being cut is positive. Citi said Infosys has showed a substantial beat in Q3.

Story first published on: January 11, 2013 10:05 (IST)

Tags: Infosys, Infosys Q3, S.D. Shibulal, Guidance

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