How Infosys Shares Will React Post Q3 Numbers?

IT major Infosys reported a mixed set of results for the quarter ending Dec 31, 2018. The company reported a sharper then expected drop in its margins, while revenue was according to estimates. The shares could react positively when trading resumes next week largely on account of the buyback of shares.

The IT major has announced a buyback of shares at Rs 800, which is a 17 per cent premium to the present market price of Rs 682. This should lend support to the stock, though the company's buyback would entail a very small per centage of 2.36 per cent of the total paid capital.

However, what's most interesting would be the revenue guidance at the company, which was revised upwards and this should help the price too.

FY19 revenue guidance in constant currency revised upward to 8.5-9.0% while the Operating margin guidance retained at 22-24%. It would be interesting to see if the company can manage to maintain the margins, given the costs pressures especially from wage hikes and overseas.

In all probability we will see some increased buying in the stock of Infosys and the valuations, could come closer to the stock of TCS, with the latter being an outperformer in the last few quarters.

If you are likely to hold Infosys for say 2-3 years, do not expect returns more than bank deposits.

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