Infosys share price outlook: Will June quarter be worse than March for IT? Check brokerage calls, target price

Global cues hint at a negative quarter for the IT sector. Meanwhile, Infosys shares have a ‘Buy’ rating from multiple analysts, while some has downgraded it to ‘Sell’.

Infosys share price outlook
Infosys stock has been falling since last month after the Q4 results missed analysts' expectations.

Infosys shares have been falling since the IT giant reported weak Q4 results last month. Infosys stock tanked 15% on April 17 after the results were announced, and are now down over 16% year to date. In comparison the Nifty IT index has fallen over 2% in the last one month and 7.6% in the one year. The weakness in the IT sector has been primarily due to the slowdown in the US market owing to the banking crisis, and forecasts of the world’s biggest economy may slip into recession.

Analysts predict that the April-June quarter could be worse than the January-March quarter, and that the shares of IT firms may fall further as the signs of the strong bounce-back of the US economy slowly fades. Meanwhile, the fall in Nasdaq will continue to negatively affect the Indian IT sector. Despite all the negative cues, Infosys stock has a ‘Buy’ rating from multiple analysts, while some has downgraded it to ‘Sell’.

Why June quarter could be worse than March quarter for IT sector?

The June quarter could be weaker than the March quarter for many companies, except Infosys, according to analysts at Kotak Institutional equities. “We attribute the weakness to project pauses and cancellations in North America and select verticals such as banking and communications. The pause and cancellations materialized in February and accelerated in March. The full impact of this will be visible in the June 2023 quarter,” said analysts. After a 7-20% correction in stock prices on IT firms, valuations are reasonable for select companies but these valuations assume 3-4% growth acceleration and some level of margin expansion in FY2025E. Analysts believe that there are reasonable upsides in Infosys though it had a bad March quarter and could have handled expectations better. Still the fundamental underpinnings of the business are extremely strong.

Should you buy or sell Infosys stock?

Prabhudas Lilladher: Buy – Stop Loss: Rs 1200 –  Target: Rs 1420 (11.7% upside)

Infosys stocks has witnessed a decent erosion recently and has indicated consolidation with support maintained near Rs 1220, said analysts at Prabhudas Lilladher. “Currently with the stock picking up gradually and with a move past the Rs 1280 zone would further strengthen the bias to anticipate for upward move in the coming days. With the RSI indicator showing significant pullback from the highly oversold zone has improved the bias to some extent,” said Vaishali Parekh, Vice President – Technical Research, Prabhudas Lilladher. With the chart looking attractive she anticipates a further rise and suggests buying Infosys stock for an upside target of Rs 1420 and stop loss at Rs 1200.

Reliance Securities: Sell – Target Price: Rs 1350

Analysts at Reliance Securities remain cautious as the concerns of the global slowdown and delayed decision-making in the US rises. “Due to lower earnings growth and valuation, we downgrade INFO to SELL from BUY with a revised TP of Rs1,350, (vs. earlier Rs1,750), valuing the stock at a revised P/E multiple of 18x on FY25E earnings (vs. earlier 22x),” said Reliance Securities.

Infosys may give decent returns in the next 3-4 months

“We believe with strong deal wins, strengthening relationships with large clients and continued investment in digital competencies, Infosys is well-positioned to beat the industry growth rate in the coming quarters. We advise investors to remain invested in Infosys to see a decent return in the next 3-4 months,” said Rajesh Sinha Sr. Research Analyst at Bonanza Portfolio Ltd.

Infosys: Technical Outlook

Infosys stock may rise towards Rs 1400 if Rs 1200 support is not breached

“Infosys management’s forward guidance was relatively neutral. The stock is expected to trade within a wide range of 1200-1400. If buyers (bulls) can maintain support at the 1200 level, there is potential for an upward movement towards 1400,” said Kunal Shah, Senior Technical and Derivative analyst at LKP Securities.

Infosys downside limited to Rs 1185-1078

“Looking at domestic IT major’s commentaries and guidance we believe the worst is behind us. Technically INFY is consolidating around the Rs 1265-1230 zone with an optimistic trend. In the worst-case scenario, the downside is limited to Rs 1185-1078. In a best-case scenario, Rs 1390-1400 can be the possible upside in the near term,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

Infosys may gain up to 53% if it breaks and sustains above Rs 1300

“Infosys has strong support at Rs 1050-1020, which has held up during several pullbacks in the past year. The resistance level for INFY is currently at around Rs 1300, which the stock has not yet been able to break through. Once the Price breakout this range a good upside movement is possible in this stock with possible gains of up to 30% to 53% in the coming months. If INFY sustains above 1310 in the near term we can see a target of 1380/1430/1500/1550/1600,” said V.L.A. Ambala (SEBI Registered Research Analyst), Stock Market Today (SMT).

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First published on: 10-05-2023 at 13:09 IST