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Infosys shares fall 1% after analyst meet, down 21% YTD; analysts bullish, see up to 33% potential rally

Infosys shares fell 1 per cent on Wednesday, a day after the IT major in an analyst meet reiterated its FY23 guidance of 13-15 per cent and said demand for IT services is strong and that there is no visible impact of macro headwinds. So far this year, Infosys stock has plunged more than 20 per cent

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Analysts expect Infosys share price to rally going forward on the back of strong growth

Infosys shares fell 1 per cent on Wednesday, a day after the IT major in an analyst meet reiterated its FY23 guidance of 13-15 per cent and said demand for IT services is strong and that there is no visible impact of macro headwinds. So far this year, Infosys stock has plunged more than 20 per cent, underperforming Nifty which has tanked 6%. Analysts expect Infosys share price to rally going forward on the back of strong growth. A few analysts who attended the analyst meeting maintained their ‘buy’ ratings on the stock, with their price target suggesting up to 33% per cent potential upside on the counter. Infosys shares were quoting at Rs 1,489 per share, down 0.96 per cent on BSE intraday.

Analysts maintain ‘Buy’ rating on Infosys stock

Motilal Oswal: Buy
Target price: Rs 2,000; Upside: 33%

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% upside.

JM Financial: Buy
Target price: Rs 1,800; Upside: 19%

JM Financial said Infosys reiterated commitment to the playbook unveiled in 2018, which was underpinned by client relevance and relentless focus on execution. This, it said, helped Infosys lead Tier I techs on growth in recent years. The brokerage noted that Infosys has done well on large deal wins and mining top accounts. Infact. Infosys has had a better conversion of over $50 million clients to the next level relative to TCS in recent years, analysts at the brokerage firm 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,” the brokerage said.

IIFL Securities: Buy
Target price: Rs 2,000; Upside: 33%

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% 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% for FY23, said analysts. “We forecast INFO to deliver top quartile USD revenue/EPS Cagr of 15%/17% 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 stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

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