Infosys hit a record high on Monday, rising 3.6 per cent to Rs 1,249.90 in intraday trade. India's second biggest IT services company not only outperformed the Sensex (up 0.5 per cent), but also beat the IT sub-index on the Bombay Stock Exchange, which advanced 2 per cent.
What's Driving Infosys Higher?
1) Infosys saw buying interest on a day when IT stocks were in favour on account of many merger and acquisition deals. Blackstone Group marked its single-biggest investment in India by announcing its decision to buy a majority stake in Mphasis in an up to $1.1 billion deal.
Last week, HCL Tech announced the acquisition of Geometric's IT services business for Rs 1,283 crore in an all-share deal. Rising M&A deals signal increasing bullishness for the IT sector.
2) Analysts expect Infosys to beat Street estimates in March quarter, numbers for which will be announced on April 15, 2016. Religare expects Infosys' revenues to come in at the upper end of its revenue guidance of 8.9-9.3 per cent year-on-year.
The brokerage also expects Infosys to guide for industry beating revenue growth (over 10-12 per cent) for the current financial year. Religare expects Infosys to guide for 10.5-12.6 per cent dollar growth in FY17.
3) There's optimism that domestic IT industry will grow in double digits as more companies push high-margin digital services to offset a cut-back in routine IT spending by clients.
India's IT and software services export revenue is likely to grow by 10-12 per cent in the fiscal year beginning on April 1 to as much as $121 billion, according to trade body National Association of Software and Services Companies (Nasscom).
Infosys has outperformed the broader markets post its Q3 results announcement. The stock has gained around 15 per cent as compared to 2 per cent rise in the Sensex since January 13, 2016. Infosys closed 3.12 per cent higher at Rs 1,243.55 today
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