Nifty 50 hits all-time high again thanks to Infosys, TCS Q3 results

At 01:45 pm, the index traded higher by 231.85 points or 0.98%, at 21,866 points. It’s noteworthy that the key drivers behind the rally were two IT stocks – Infosys and TCS.

Both IT giants released their Q3 FY24 financial results on Wednesday after market hours. Despite the muted figures, they aligned with analyst estimates, sparking a substantial increase in share prices during today’s trade.

Infosys saw its shares jump a remarkable 8% during intraday trade, reaching ₹1,615 apiece. This surge stands as the stock’s most significant intraday gain in the last 3 years, and this remarkable gain contributed 94 points to Nifty 50’s today’s rally.

Also Read: TCS vs Infosys: 5 most important comparisons you should know

Similarly, TCS stock witnessed a 4.41% intraday jump, reaching ₹3,899 per share, contributing 35 points to the overall index rally. Together, the contributions from both IT giants totaled 129 points, accounting for 61% of the index rally.

Further, the sharp uptick in Infosys and TCS shares has extended to other major IT stocks such as Coforge, Tech Mahindra, and Wipro, which are currently trading with gains exceeding 4%. All 10 constituents of the Nifty IT index were trading in positive territory as of 01:45 pm, propelling the index to a gain of over 5% at 36,501 points.

Also Read: Wipro, HCL Tech shares rise after better-than-expected TCS Q3 results

Simultaneously, other Nifty 50 constituents, such as ICICI Bank, Reliance Industries, and State Bank of India, are also contributing to the Nifty 50’s sharp rally.

Infosys and TCS: Third quarter performance

TCS posted a 2.48% QoQ drop in its consolidated net profit at ₹11,058 crore in Q3 FY23. In the preceding quarter (Q2 FY24), it reported a net profit of ₹11,380 crore. Comparing the year-on-year (YoY) performance, there was a 2% improvement in net profit. In the same quarter a year ago, the company had recorded a net profit of ₹10,883 crore.

During the quarter, the company’s net profit was affected by a one-time charge of ₹958 crore, allocated towards the settlement of a legal claim, according to the company’s earnings filing.

Also Read: Polycab India Stock: Over 28% drop in 6 sessions leads to retail investors losing ₹3,108 crore; here’s why

Infosys posted a consolidated net profit of ₹6,106 crore, down over 7% from ₹6,586 crore in the year-ago period. On a sequential basis as well, the company’s profit fell 1.7% from ₹6,212 crore in the September 2023 quarter.

In terms of deals, Infosys reported a TCV of $3.2 billion, which is lower than the $7.7 billion reported in the preceding quarter. In parallel, TCS reported a TCV of $8.1 billion in Q3, marking a decline from the $11.2 billion reported in the preceding quarter and missing the company’s quarterly guidance range of $9–10 billion.

Bullish sentiment

As both companies reported Q3 FY24 results largely in line with their expectations, brokerage firms have revised their target prices. Nuvama Institutional Equities has affirmed its ‘buy’ recommendation on Infosys and raised its target price to ₹1,850 apiece, up from the previous ₹1,800. Likewise, global brokerage firm Jefferies has also retained its ‘buy’ rating on the stock with a target price of ₹1,740 per share.

Phillip Capital, another brokerage firm, has adjusted its target price for Infosys to ₹1,690 per share from the earlier ₹1,520. Emkay Global Financial Services has maintained its ‘buy’ recommendation on Infosys with an unchanged target price of ₹1,850 per share.

As for TCS, Nuvama Institutional Equities continued with its ‘buy’ stance on the stock and has raised the target price to ₹4,500 per share from ₹4,400. In a similar vein, Phillip Capital has also revised its target price for TCS after the Q3 results, now setting it at ₹4,180 per share. Sharekhan, maintaining its ‘buy’ recommendation on the stock, has an unchanged target price of ₹4,200 per share.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 12 Jan 2024, 02:54 PM IST