Infosys share price tumbled as much as 5.6 per cent intraday to Rs 1,320.35 apiece on BSE on Thursday, a day after IT giant posted 17 per cent on-year rise in net profit in the January-March quarter. Infosys stock was the top Sensex loser on the back of lower consolidated profit growth as compared to estimates and profit booking. Also, in the overnight trade, Infosys ADR plunged 6 per cent to $1731 per share. “Price correction in stocks like Infosys is rarely due to a structural change in the long-term prospects of the business,” Tanushree Banerjee – Co-Head of Research, Equitymaster, told Financial Express Online. Banerjee added that it is typically due to the company not meeting the street expectations in terms of quarterly EPS estimates.
Infosys stock hit a fresh 52-week high of Rs 1,480 apiece earlier this week, a day before the quarterly earnings. So far this week, Infosys stock has tumbled 11 per cent. During FY21, the company has crossed a milestone of Rs 1 lakh crore in revenue. Moreover, large deal TCV (total contract value) for the fiscal, peaked to an all-time high of $14.1 billion with 66 per cent being net new. “Technically, this was a much-needed correction and long term investors can buy near Rs 1,320-1,330 for higher targets of Rs 1,435-1,530 in the coming weeks,” AR Ramachandran, Co-founder & Trainer, Tips2Trades, told Financial Express Online.
Also read: Infosys declares Rs 15 per share final dividend; Q4 results meet estimates, net profit up 17% on-yr
Infosys’ board has also approved a Rs 9,200 crore buyback of equity shares from the open market. The company will buy back shares at a maximum Rs 1,750 apiece, a premium of 25% on the current market price of Rs 1,398 apiece. “The company’s buyback proposal (25 per cent premium to market price) also stands in good stead for shareholders,” Banerjee said. She also said that the company’s efforts towards investing in new tech business (like drone make ideaForge) can potentially have big upsides over the long term.
Also read: Infosys to buy shares at 25% premium to current price; approves Rs 9,200 crore buyback plan
Infosys share price has surged 8.5 per cent in January-March 2021. During the quarter ended March 31, 2021, the Nifty IT index jumped 6.61 per cent, as against a rise of 5 per cent in the Nifty 50 index. Infosys reported soft 4QFY21 print and FY22 operating margin guidance range of 22-24 per cent came in slightly below expectations. Additionally, attrition spiked up by almost 500bp sequentially, which suggests that the company needs to spend more on retaining talent. “On the other hand, FY22 revenue growth guidance of 12-14% (CC) seems robust and US$1.2bn buyback program to limit downside risk,” Suyog Kulkarni, Senior Research Analyst at Reliance Securities, told Financial Express Online. IT bellwether also announced that its Board of Directors has recommended a final dividend of Rs 15 per share, which will be paid on June 25, 2021 and the record date for the same would be June 1, 2021.