The large IT services firm based in Bengaluru saw a 5% increase in early trade on Friday, July 19, following the release of the company’s better-than-expected Q1 earnings the day before. At the peak of the day, the stock reached a new 52-week high of Rs 1843, and at the final count, it was up 3.6% at Rs 1,823.05.
The second-largest IT company in the nation reported a consolidated net profit of Rs 6,368 crore for the April–June quarter, down 20.1% sequentially but up 7.1% year over year. The research department predicted that net profit would decline sequentially by 20.9% to Rs 6,300 crore from Rs 7,969 crore recorded in the prior quarter.
The company’s revenue for the reporting quarter was Rs 39,315 crore in rupees, which is a 3.6% YoY increase. The Zee Business research department had projected that the sales would be Rs 38,900 crore. The company’s consolidated revenue for the quarter that ended in March of last year was Rs 37,923 crore.
The digital services and consultancy company’s revenue increased by 3.6% on a sequential basis to $4,714 million, and 2.5% on an annual basis in constant currency.
During the review period, the company’s operating margin increased by 1% from quarter to quarter to 21.1%.
Positively, the company has also increased its projection for sales growth to 3%–4% in constant currency terms. For FY25, the operating margin is expected to be between 20% and 22%. The desk projected that for FY25, the company would continue projections for 20–22 per cent EBIT margin growth and 1-3 per cent CC profits growth.
The company’s shares touched a new 52-week high earlier in the trade, and it closed the day higher by about 2 per cent at Rs 1,759.15 per share, ahead of the results announcement.
Global stockbroker Jefferies has increased its target price for the stock from Rs 1,630 to Rs 2,040, indicating a possible upside of about 16 per cent, while still recommending a buy. According to the brokerage, the company’s Q1 revenue growth of 3.6% QoQ helped it surpass projections. Additionally, it stated that even though the company has increased its growth target for FY25, it still seems conservative given the recent wave of significant transaction wins.
The brokerage also emphasized that solid contract wins and the first indications of recovery in the BFSI industry point to the end of the worst. According to Jefferies, the company will generate an EPS CAGR of 10% during FY24–27.