The shares of Infosys, the Indian multinational information technology company, hit a new high of Rs 1,755.60 a piece on Bombay Stock Exchange (BSE) on 24 August, putting the business' market capitalisation to $100 billion—becoming the fourth firm in the country to reach this milestone.
Tata Consultancy Services (TCS), Reliance Industries Limited, and HDFC Bank were the other three corporations to hit the mark. TCS had a market capitalisation of $115 billion, whereas Reliance Industries hit the $140 billion mark. With a market cap of $100.1 billion, HDFC Bank has also surpassed the $100 billion mark.
Infosys, which provides business consulting, information technology and outsourcing services, is one of India's fastest-growing firms. As reported, it has traded between a high of Rs 1,755.60 and a low of Rs 1,732.05 on 24 August.
Infosys recorded a net consolidated profit of 5,195 crore in the quarter ending June 2021, up 2.3 per cent from the previous quarter. It was also reported that the Bengaluru-based company recently increased its revenue growth forecast for the fiscal year 2022 from 12 to 14 per cent to 14 to 16 per cent. The revenue increased 18 per cent year on year to Rs 27,896 crore in the June quarter, aided by strong growth across segments.
Last week, the market worth of seven of the ten most valuable domestic corporations increased by Rs 131,173.41 crore. The largest gainers were Hindustan Unilever Limited (HUL) and TCS. While HUL's market capitalisation increased to 615,016.63 crore, TCS's valuation increased by 35,344.44 crore to 1,315,919.03 crore.
Despite the sector's stretched valuations, many experts are bullish on IT businesses for the long run. AK Prabhakar, Head of Research at IDBI Capital, is one of them. He said: "The kind of order books and pipelines that Indian IT companies have today, they are likely to do well going forward. Attrition is likely to remain high and valuation-wise, everything has gone beyond what anyone could have imagined 2-3 years ago... The lockdown has opened up lots of avenues for IT companies."
While being optimistic about the pandemic's impact on IT businesses, Prabhakar told CNBCTV18.com: "In India, now everything is being switched to digital mode. Education is on digital... So the demand for IT remains too high and might continue even going forward. Once you switch to digital, you cannot go back to the way you were... If you have a mobile today, can you go back to not having it?"
Meanwhile, Nilesh Shah, who is the Founder and CEO of Envision Capital, said: "IT services still continue to have a very stable demand environment; margins are intact, or probably they could soften a bit, but, by large, intact, strong cash flows, and valuations, which of course have kind of moved up... but they are not as expensive as I would look at the other pocket of safety such as consumer names."
Analysts expect Infosys to report superior revenue growth between FY21 and FY24, owing to execution-focused stable management, an increase in mega deals and digital acceleration. As reported by Financial Express, Suyog Kulkarni, Senior Research Analyst at Reliance Securities, said:" We expect Infosys to be a key beneficiary of multi-year technology upcycle and see the company crossing its mcap valuation of US $110 billion by FY24."
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