Shares of Infosys on Monday rose by nearly 4 per cent after the company approved a Rs 8,260-crore share buyback and also raised its revenue growth forecast.
After a positive opening, shares of the company further gained 3.70 per cent to Rs 709 on BSE.
At NSE, shares of the company jumped 3.90 per cent to Rs 710.20.
India's second largest IT firm Infosys Friday reported a 30 per cent drop in its December quarter net profit on higher expenses even as it approved a Rs 8,260-crore share buyback -- the second in less than 13 months' time.
Its net profit slumped to Rs 3,610 crore in October-December 2018 from Rs 5,129 crore in the same period a year ago, the company said in a statement.
In spite of the drop in quarterly profit, the company raised its revenue growth forecast for the fiscal year ending March 2019 to 8.5-9 per cent in constant currency terms, from 6-8 per cent previously. Revenue from operations rose 20.3 per cent to Rs 21,400 crore.
Infosys said it will buy back 10.32 crore shares, or 2.36 per cent, for no more than Rs 800 per share -- 17 per cent higher than the closing price of Rs 683.70 per share on the BSE.
Infosys also declared a special dividend of Rs 4 per share. Sanjeev Hota, AVP Research at Sharekhan by BNP Paribas said, Infosys' performance surprised positively with strong top-line growth for the quarter, though margin performance missed the mark.
"Increase in revenue guidance and better exit rate for FY19 provides comfort on double digit growth in FY20. Buyback quantum seems to be below than expectation, however, will support the stock performance in medium term," he added.
Here’s how brokerages rate Infosys after Q3 results: Credit Suisse: Maintains NEUTRAL, target at Rs 680 per share. Revise estimates slightly due to lower margin assumptions. Improved revenue growth positive but margin cut could revise estimates down.
As growth rate may catch up TCS, valuation gap may reduce.
Morgan Stanley: EQUAL-WEIGHT call, target at Rs 759 per share. Strong beat on revenue but miss on margin.
FY19 revenue guidance raised.
Macquarie: Maintain OUTPERFORM, target at Rs 770 per share. Revenue surprise and upgrade of FY19 revenue guidance positive from Q3. Margin pick-up unlikely in near-term. Investments, ramp-up of large deals and wage corrections may cap margin pick-up.
Progressing on the right path to ensure revenue acceleration.
Kotak Institutional Equity: Maintains ADD call, target cut to Rs 760 from Rs 780 per share. Impressed with strong revenue growth, large deal signings and stable client metrics. Putting building blocks in place for sustainable growth. Revenue outlook improved but comes at a cost of margin.
Upgrade revenue estimates, cut EPS estimates by 3-4%.
BNP Paribas: BUY rating, target at Rs 770 per share. 3-year plan is based on digital, automation, employee reskilling and localization.
See margin levers in productivity, digital, more efficiency in onsite costs.
HSBC: Retains BUY call, target at Rs 880 per share. Revenue beat in Q3 and guidance upgrades reinforce our positive view. Cost pressure may lead to better pricing in a stable currency environment.
Company remains our top pick in the sector.
CLSA: BUY call, target raised to Rs 930 from Rs 910 per share. Growth acceleration, capital return and a demand recovery merit a rerating. Margin miss; adjusted margin in the middle of its guided range. Beat revenue estimates sharply in a seasonally soft quarter. Growth broad-based, led by key geographies US and Europe. Large deal wins remained strong at $1.6 billion. Raise our revenue forecast 1-2% but cut margin estimate by 30-50 bps.
Open-market buyback may drive FY19-21 EPS and target by 1-2%.
Investec: BUY call, target cut to Rs 784 from Rs 820 per share. Solid beat on revenue; margin weakness to continue. CC revenue growth gap vs TCS narrowed after widening for two quarters. Commentary suggests continued margin weakness in Q4FY19.
Buyback should restrict downsides on the stock.
(The brokerage inputs were added by the CNBC-TV18 web desk team.)