Infosys Becomes 4th Indian Company To Breach Rs 8 Lakh Crore Market Capital: How This Happened?

After witnessing highs on four consecutive sessions, IT giant Infosys became the fourth Indian company to hit the Rs 8 trillion market capitalization mark as its shares touched an all-time high of Rs 1913 on BSE in early morning. 

Surge In Infosys Stock 

Before this  Reliance Industries , TCS, and HDFC Bank have achieved this milestone in market capitalization.

Prior to this, the script was trading at Rs 1866 as of writing, up 0.5% from its previous close. 

Contrary to that, Sensex fell 0.71% to 56,906.63 points.

So far, Infosys stock has jumped over 52% this year. 

The IT major is expected to announce its December quarter earnings on 12 January.

According to analysts, Cloud adoption and digital transformation will support strong demand for IT services over the next 3-5 years.

Strong Demand For IT Services

It seems that Infosys is amongst the best-positioned companies to benefit from strong demand. 

The IT firm is backed by its strategic investments in scaling up digital capabilities, winning market share, and expanding presence in Europe.

In a note to investors, brokerage firm Sharekhan said, “Infosys is well-placed to deliver industry-leading organic growth among large peers in the medium term. Margins are expected to remain under pressure due to supply-side challenges, roll-out of wage hike for senior employees, and weak seasonality, which will be partially offset by strong growth in digital business, operational efficiencies, and currency tailwinds,”.

Further adding, “The stock trades at 30x/26x its FY2023E/FY2024E earnings, which is justified, given strong growth potential, robust deal pipelines, robust execution, and improving ROCE (return on capital employed). We like Infosys because of its superior digital capability, consistent investments in talents, stable management, a strong capital allocation policy, and a healthy balance sheet,”.

Growth In Horizon

In the near future, the brokerage firm expects 18.6% year-on-year growth in FY2022.

Further, it expects a 12.4% compound annual rate over FY2022-FY2024E for Infosys considering the broad-based demand, robust deal wins, and a healthy deal pipeline.

During the last quarter, Infosys has increased its FY2022 revenue guidance to 14-16% on a constant currency basis from 12-14% earlier. 

Moreover, the It giant has maintained its operating margins guidance at 22-24%.