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Updated January 12th, 2024 at 11:02 IST

IT stocks rise; Infosys surges most in over three years

Infosys hit an intraday high of Rs 1,582.65 per share, marking its biggest upmove since July 15, 2020, data from BSE showed.

Tanmay Tiwary
IT stocks rise
IT stocks rise | Image:Unsplash
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IT stocks surge: Shares of leading IT companies, Infosys and Tata Consultancy Services (TCS), saw notable gains in early trade on Friday, with Infosys rising nearly 6 per cent, its biggest single-day gain in over three years while TCS advanced above 2 per cent. The surge followed the release of their December quarter results, which exceeded market expectations.

Image Credits: Pexels

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Infosys hit an intraday high of Rs 1,582.65 per share, marking its biggest upmove since July 15, 2020, data from BSE showed and TCS soared over 3 per cent to reach an intraday high of Rs 3,857.95.

The positive financial performance of TCS and Infosys had a ripple effect, lifting other IT stocks such as Tech Mahindra, Wipro, and HCLTech, each recording gains of over 2-3 per cent.

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Infosys emerged as the top gainer on the 30-share basket of BSE, followed by Tech Mahindra, Wipro, TCS, and HCLTech.

Devang Bhatt, lead analyst at IDBI Capital Markets and Securities said, “The surge in IT stocks is not fuelled by the December quarter earnings but due to the long-term outlook. The IT companies' near-term issues may persist but the long-term outlook looks bright given the drop in attrition rate and resilient order book.”

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TCS reported a 1.5 per cent increase in its top-line to Rs 60,583 crore in the December quarter (Q3FY24), with a bottom-line drop of 2.50 per cent to Rs 11,058 crore. The profit decline was attributed to a one-time settlement of a legal claim of Rs 958 crore. 

TCS also declared a third interim dividend of Rs 9 and a special dividend of Rs 18 per equity share.

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Additionally, TCS’ order book for the third quarter came in at $8.1 billion. K Krithivasan, Chief Executive Officer and Managing Director, said, “We are seeing strong deal momentum across markets resulting in a solid order book providing visibility into our long-term growth.” 

The company’s attrition rate also dropped to 13.3 per cent in the December quarter, from 14.9 per cent in the previous quarter (Q2FY24). 

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Image Credits: Pexels

Infosys, the second-largest IT services company in the country, revised its revenue guidance for the current financial year to 1.5-2 per cent, down from the earlier estimate of 1-2.5 per cent. 

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The company reported a net profit decline of 1.7 per cent to Rs 6,106 crore and a marginal decrease in revenue from operations to Rs 38,821 crore.

In Dollar terms, Infosys' revenue stood at $4,663 million, with a sequential decline of 1 per cent in constant currency terms. 

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The company's large deal total contract value (TCV) for the quarter was $3.2 billion, with 71 per cent being net new. “Our performance in Q3 was resilient. Large deal wins were strong at $3.2 billion, with 71 per cent of this as net new, reflecting the relevance and strength of our portfolio of offerings ranging from generative AI, digital and cloud to cost, efficiency and automation” said Salil Parekh, CEO and MD.

Infosys lowered its attrition rate further to 12.9 per cent, from 14.6 per cent in the previous quarter (Q2FY24).

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Overall, the upbeat results have boosted investors’ confidence, with analysts expressing optimism for the future performance of these IT giants.

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Published January 12th, 2024 at 10:16 IST

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