Why Infosys Share Price is Rising

Earnings season is here. And to kick it off like always, the season has begun with the results of IT companies.

Yesterday, on 11 January both Infosys and TCS declared their results for the December 2023 quarter.

While shares of both companies saw an increase in price, shares of Infosys saw a larger spike despite weak results for the quarter.

The stock is up 7% in a day.

Let's find out why...

Infosys to Acquire Semiconductor Design Firm for Rs 2.8 billion

In a press release on 11 January 2024, Infosys announced that it plans to acquire InSemi, a leading semiconductor design and embedded services provider.

Founded in 2013, InSemi offers end-to-end semiconductor design services with expertise across electronic design, platform design, automation, embedded and software technologies.

It serves leading global corporations across semi-conductor, consumer electronics, automotive, and hi-tech industries.

Infosys will pay Rs 2.8 billion (bn) for a 100% stake in the firm.

Semiconductors, which are at the heart of electronic gadgets from toys to smart devices, are in the spotlight as companies race to build the most powerful chips to make the most of the artificial intelligence (AI) boom, the next tech frontier.

Infosys said the buyout would help accelerate its chip-to-cloud strategy by bringing niche design skills at scale and would also pair seamlessly with its existing investments in AI/automation platforms and industry partnerships.

Over the last five years, InSemi has built a foundation with solid growth and design capabilities across the semiconductor value chain.

With Infosys as its catalyst, it hopes to create a synergistic combination that allows it to scale and bring the power of AI & engineering R&D and next-generation technology to global clients.

Brighter Outlook Lifts Stock Despite Seasonally Weak Quarter

Infosys' revenue came in flat for the December 2023 quarter at Rs 388 bn. Dollar revenue also came in marginally lower at US$ 4,663 m in constant currency terms.

Consequentially, the company's net profit came in lower by 7% YoY at Rs 61 bn from Rs 65.9 bn reported in the previous year quarter.

However, large deal wins for the quarter stood at US$ 3.2 bn, with 71% being net new deals reflecting the relevance and strength of its portfolio of offerings ranging from generative AI, digital and cloud to cost, efficiency and automation.

The company is concentrating on securing substantial deals to propel further growth.

The heightened adoption of next-generation artificial intelligence, such as TOPAZ and Cobalt cloud, is anticipated to generate long-term value for the business.

The management is actively engaged in cost optimisation efforts with the aim of enhancing margins and ensuring financial efficiency.

How Infosys Share Price has Performed Recently

In the past month, shares of the company have gained over 9%.

The stock has gained 21% in the past six months and around 9% in the year gone by.

The stock touched its 52-week high of Rs 1,620 on 9 February 2023 and a 52-week low of Rs 1,215.45 on 25 April 2023.

At the current price, the company trades at a price to earnings multiple of 25.5 and price to book value multiple of 8.5x.

About Infosys

Infosys is an IT company that provides consulting, technology, outsourcing and next-generation digital services to enable clients to execute strategies for their digital transformation.

It is the second largest Information Technology company in India after TCS.

At present, the company caters to over 185 Fortune 500 companies. Its clients include ICICI Bank, Daimler Mercedes-Benz, HSBC Bank, Goldman Sachs, J&J, Accenture, US Army, US Navy, Lockheed Martin, IBM Corporation, Deutsche Bank and others.

To know more, check out the Infosys company fact sheet and quarterly results.

You can also compare Infosys with its peers.

Infosys vs TCS

Infosys vs CE Infosystems

Infosys vs Intellect Design

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