Infosys Shares Drop Post Analyst Meet But Analysts See 60% Rally in Future; Know More

Infosys, in its analyst meeting, reiterated its FY23 revenue growth guidance of 13-15 per cent YoY. The management allayed investor concerns around growth by reemphasizing that long-term prospects look robust. They said that they are not seeing any softness in demand despite macro headwinds. Going forward, Infosys expects growth to be led by cloud and digital with geographies like Europe seeing accelerated growth. The company also maintained that they have several levers to drive high margins and are well-poised to gain market share and deliver value.

Post the analysts meet the fell 2.19 per cent intraday to Rs 1,471 against the previous close of Rs 1,503.95 on BSE. Later, shares of Infosys closed 1.67 per cent lower at Rs 1,478.90 on BSE. Infosys share stands higher than 5-day moving averages but lower than 20-day, 50-day, 100-day and 200-day moving averages. The large cap stock has lost 21.82 per cent since the beginning of this year and risen 6.48 per cent in one year.

Total 4.35 lakh shares changed hands amounting to turnover of Rs 64.95 crore on BSE. Market cap of the firm fell to Rs 6.22 lakh crore on BSE. The stock hit 52-week high of Rs 1953.70 on January 17, 2022 and fell to a 52-week low of Rs 1362.20 on June 2, 2021.

The IT major said Europe would be a key growth driver with large companies in the region showing greater willingness to look at digital transformation and a global delivery model.

A few analysts attending the meeting have maintained their ‘buy’ ratings on the stock, with their price target suggesting up to 20-60 per cent potential upside on the counter.

Edelweiss said a faster growth in FY23 than last year is in order. It sees strong growth in FY24 and the first half of FY25. “Beyond that, we do not have visibility as of now. Additionally, even if a macro slowdown occurs, we believe, clients will use this opportunity to invest in tech to gain market share and improve efficiencies as they did during covid,” it said while suggesting an unchanged target of Rs 2,426 that is an upside of almost 60 per cent.

Analysts at Motilal Oswal said that while growth in the March quarter was muted, demand remained intact and Infosys’ order book was strong. The management’s FY23 growth guidance and high headcount addition provide further visibility on demand. “We expect Infosys to deliver margin on the higher side of its guidance band, with strong growth and reduced dependence on sub-contractors as attrition falls. We expect the company to be a key beneficiary of an acceleration in IT spends. Based on our revised estimates, the stock is currently trading at 21 times FY24E EPS. We value the stock at 28 times FY24 EPS, implying a target of Rs 2,000,” they said, implying 33 per cent upside.

Post the analyst meet, financial services firm Emkay Global gave a buy rating to the stock with a 31 per cent (Rs 1,970) upside over the current market price of Rs 1,504.

JM Financial Services said, “We moderate our dollar revenue growth estimates to factor in adverse cross currency moves as well as realign exchange rate to 77 per dollar, driving a 1-1.5 per cent cut to our FY22-24 EPS. We maintain BUY with a revised target of Rs 1,800 from Rs 1,970 earlier) as we lower PER to 26 times (10 per cent discount to our target PE for TCS) even as we roll forward to June’24.

Analysts at IIFL Securities pointed out that Infosys highlighted the criticality of digital transformation projects by enterprises that is leading to continued demand momentum, despite the on-going macro challenges. Its strong order book and increasing deal pipeline combined with robust hiring outlook gives the management confidence to deliver on its FY23 revenue growth guidance of 13-15 per cent on-year. Its focus in the near term is to fulfill the demand and gain wallet share vs. peers which is reflected in its EBIT margin guidance of 21-23 per cent for FY23, said analysts. “We forecast INFO to deliver top quartile USD revenue/EPS Cagr of 15 per cent/17 per cent over FY22-24ii and it remains our top large-cap pick in the sector,” the brokerage said. It maintained a ‘buy’ call on the stock with a target price of Rs 2,000.

The views and investment tips by experts in this report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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