The rally on Tuesday was fuelled by the landmark $3-billion deal with German automotive major Daimler for infrastructure overhaul and cloud migration services.
India’s market cap league table is led by Reliance Industries at Rs 12.3 lakh crore, followed by TCS, HDFC Bank and HUL. Infosys is ahead of HDFC, Kotak Mahindra Bank and ICICI Bank.
Since March, when its market cap was 2.7 lakh crore, Infosys’s market cap has almost doubled. Under CEO Salil Parekh, Infosys has got its mojo back, participating in large deal pursuits, making tuck-in acquisitions and putting a tight-knit cloud narrative in its go-to-market offerings.
Infosys has bagged three deals over $1 billion dollars – Verizon, Vanguard and Daimler – in the last one year. The Daimler deal will bolster Infosys’s presence in the automotive space. A $1-billion Pfizer contract, sources said, is being hotly-contested by Infosys, TCS, Cognizant, and other MNC peers.
Jimit Arora, partner in US IT research advisory Everest Group, said he expects 2021 to be a potentially stellar growth year for three key reasons: mega deals, pent-up demand from 2020, overall modernisation, and digital transformation moves from pilot to programme.
Mrinal Rai, principal analyst in IT advisory ISG, said he sees slight improvements or perhaps acceleration in annualised contract values (ACVs) for the March quarter globally if some of the larger transactions come to award.
“The Infosys-Daimler contract is on similar lines of transferring and transitioning. ISG has explained in its quarterly index that many large enterprises would try to shed off their captive centres and most of these large deals would be examples of such initiatives. Also, deals of this size usually are signed for longer duration (more than five years on an average). However, with Covid-19 and resulting changes, clients are mostly looking for digital transformation initiatives that can be executed at a faster rate and in shorter duration,” he said.
Sandip Agarwal of Edelweiss Securities said that with the US presidential election completed, news about more such deals is expected to be announced. “We believe the current technology wave is the biggest in history and that consensus and companies will keep upgrading numbers and guidance hereon. We maintain digitalisation is a more potent catalyst for Infosys than IMS (infrastructure management services), which lifted m-caps of competition by 9.8–14.5x over 2009–16,” a report by Edelweiss Securities noted.
Edelweiss Securities has a price target of Rs 1,850 for Infosys. At this level, Infosys’s stock price will be more than three-and-half times its March low at Rs 511. A recent study by Motilal Oswal Financial Services showed that Infosys has been the fastest wealth creator in the last 25 years, with the stock multiplying a staggering 688 times, and the third biggest. The study uses data up to March 31, 2020.