Infosys or TCS: Where to put your money post December quarter earnings?
By Rahul Oberoi
IT majors Infosys and Tata Consultancy Services (TCS) both met Street expectations with their December quarter numbers.
Where Infosys retained its guidance for the year, signaling stability in business environment for the company, TCS expects a rebound on the back of strong growth in key sectors, like retail, and in major markets, like the US.
Infosys on Friday reported a 37.6 per cent sequential growth in December quarter net profit at Rs 5,129 crore, which was way higher than a Rs 3,599 crore estimate that analysts had projected in an ETNow poll.
TCS on Thursday posted a 1.3 per cent quarter-on-quarter (QoQ) increase in net profit at Rs 6,531 crore. Analysts in an ET Now poll had estimated the bottom line figure to come in at Rs 6,532 crore. TCS had posted a net profit of Rs 6,446 crore in the sequential quarter ended September 30, 2017.
In case of Infosys, per capital revenue crossed $53,000 for the first time ever in Q3FY18.
In last one year, shares of Infosys and TCS have risen 8 per cent and 18 per cent, respectively, to Rs 1,078 and Rs 2,772 on January 12, 2018 from Rs 1,000 and Rs 2,343 on January 12 last year.
Benchmark BSE IT index advanced 15.30 per cent to 11,699 from 10,144 in the same period.
TCS’ December quarter revenues and margins remained broadly in line with estimates, said Sharekhan.
“Given the positive commentary on the retail vertical and continued growth momentum in the digital vertical, we expect earnings to grow at a CAGR 8.5 per cent over FY2017-FY2020. However, given the regulatory overhang (US tax reforms impact) and sluggishness pick-up in spend in BFSI segment (32% of total revenue), we maintain a hold rating on the stock with a revised price target of Rs 2,950,” the brokerage said.
Gaurang Shah, Head of Investment Strategist at Geojit Financial Services, says he remains equally positive on TCS, Infosys as well as HCL Tech.
“My sense is that concern that bogged down Infosys over the last six to eight months is a matter of the past. If you ask me, where there could be a little bit of more outperformance over the next couple of quarters, with better-than-expected Q3 numbers, I think the spotlight should be on Infosys,” he said in an interaction with ETNow.
Infosys has retained its 2017-18 dollar revenue growth of 5.5-6.5 per cent in constant currency (CC) terms. Besides, it has maintained its 2017-18 operating margin range guidance at 23-25 per cent.
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Via:: Economic Times – Stocks