Infosys Ltd rallied to a record in Mumbai on Friday after the company, the second-biggest software services provider in India, revealed in a statement that it intends to issue stock as dividend to shareholders and that its second-quarter profit surpassed analysts forecasts.
According to the India-based companys statement, the board of Infosys recommended shareholders to get one share as dividend for each share they currently hold. An interim cash dividend of 30 rupees a share will also be paid by the company. The issue of new stock is subject to investor approval and will not change the par value of the shares.
“The board approved and recommended the issuance in order to increase the liquidity of its shares and to expand the retail shareholder base,” the software services provider said in its statement.
The company also shared that its net income in the second fiscal quarter ended September 30th increased from INR24.07 billion rupees a year earlier to INR31 billion ($507 million). This result surpassed the initially projected by analysts net income of INR29.6 billion. Infosys sales rose by 2.9% and reached INR133.42 billion. The company is considered to have drawn benefits from a decline in the rupees value against the US dollar and from cutting the number of employees on standby.
Although this was the slowest rate of quarterly revenue growth in more than four years, the company reaffirmed its full-year revenue growth guidance. Infosys said it expects annual sales to jump by 7% to 9% in the fiscal 2014-2015 year from the previous years revenue of $8.25 billion.
Ankita Somani, an IT analyst at MSFL research commented on the companys statement for the Financial Times: “This is sentiment positive for the stock. But what I want to see now is what Infosys is planning in terms of its big bets? What are they going to do to catch up with peers in terms of dollar revenue growth rates?”
Infosys Ltd surged to INR3 908.00 on Friday in Mumbai, the highest on record, before closing 6.63% higher at INR3 888.65 per share, marking a one year change of +23.33%. The company is valued at INR2.22 trillion. According to the Financial Times, the 55 analysts offering 12-month price targets for Infosys Ltd have a median target of INR3 800, with a high estimate of INR4 600 and a low estimate of INR2 859.
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