Shares of India‘s second-largest IT firm, Infosys, surged nearly 5% to reach a new 52-week high of Rs 1,843 in early trade on the BSE on Friday, July 19. This rise followed the company’s better-than-expected April-June quarter (Q1FY25) results reported the previous day.
Infosys’ share price opened at Rs 1,842.05, up from its previous close of Rs 1,759.15, and climbed 4.8% to hit the 52-week high of Rs 1,843. By around 9:20 am, the stock was trading 3.52% higher at Rs 1,821 per share.
Q1FY25 Performance
Infosys reported a consolidated Profit After Tax (PAT) of Rs 6,368 crore for the quarter ended June 30, 2024, marking a 7.1% increase compared to Rs 5,945 crore in the same period last year.
The company’s revenue from operations for the quarter reached Rs 39,315 crore, up 3.6% from Rs 37,933 crore in the corresponding quarter of the previous fiscal year.
On a quarter-on-quarter basis, revenue increased by 3.7% from Rs 37,923 crore reported in the January-March quarter. Infosys indicated an expected operating margin of 20-22% for the current financial year.
Revenue Guidance and Dollar Revenue
Infosys has projected a revenue growth of 3%-4% in constant currency for FY25, with an expected operating margin between 20% and 22% for the current financial year.
For the quarter, Infosys reported dollar revenue of $4,714 million, reflecting a 2.1% increase from $4,617 million in Q1FY24 and a 3.3% rise from $4,564 million in Q4FY24.
The company’s Profit After Tax (PAT) for the quarter stood at $763 million, up 5.5% year-on-year but down 20.4% quarter-on-quarter.
Brokerages on Infosys
Nomura on Infosys
Nomura has raised its target price for Infosys to ₹1,950 while maintaining its ‘Buy’ call. The brokerage firm highlighted that Infosys delivered an all-around beat in its Q1FY25 results. The company’s surprise revenue guidance was driven by a strong start to the fiscal year, significant deal wins, and successful acquisition integration.
Nomura also noted that the positive impact of Project Maximus on margins continues to play out. Consequently, it has raised its FY25-26 EPS estimates by nearly 2-3% and reiterated Infosys as a top pick.
Jefferies on Infosys
Jefferies has raised its target price for Infosys to ₹2,040 while maintaining a ‘Buy’ call. The brokerage noted that Infosys’ Q1 results beat estimates, driven by a strong revenue growth of 3.6% quarter-on-quarter.
Despite this, Jefferies considers the company’s raised FY25 growth guidance to be conservative, given the strong deal wins. The report highlighted initial signs of recovery in the BFSI sector and significant deal wins as indicators that the worst is behind.
Additionally, an all-around improvement in operating performance supports this optimistic view. Jefferies has raised its estimates by 3-4% and expects Infosys to deliver a 10% EPS CAGR over FY24-27.
Bernstein on Infosys
Bernstein has raised its target price for Infosys to Rs 2,100 while maintaining an ‘Outperform’ call. The brokerage noted that Infosys delivered its strongest performance in 10 quarters in Q1, exceeding expectations in revenue, margin, and EPS.
The company raised its FY25 revenue guidance to 3-4% year-on-year in constant currency, up from the previous 1-3%. Deal momentum was also strong, with a total contract value (TCV) of $4.1 billion and 57 net new deals.
JP Morgan on Infosys
JP Morgan has raised its target price for Infosys to Rs 1,950 while maintaining an ‘Overweight’ call. The brokerage noted that Infosys’ Q1 performance served as a perfect contrast to a poor Q4 FY24, significantly beating expectations in revenue, margin, EPS, and free cash flow (FCF).
Additionally, the company upgraded its guidance with the help of some positive one-off revenues and margins. Infosys’ new revenue guidance of 3-4% year-on-year breaks down to 2.3-3.3% organic growth, implying a compound quarterly growth rate (CQGR) of 0.8-1.5%.
Goldman Sachs on Infosys
Goldman Sachs has raised its target price for Infosys to Rs 1,870 while maintaining a ‘Buy’ call. The brokerage highlighted that Infosys’ Q1 performance beat expectations, suggesting upside risks to its guidance.
Commentary from Infosys and some of its peers indicates that the demand environment is gradually improving. Goldman Sachs expects FY25 revenue growth for Infosys and the sector to be approximately 400 basis points higher compared to FY24.
Citi on Infosys
Citi has raised its target price for Infosys to Rs 1,850 while maintaining a ‘Buy’ call. The brokerage reported that Infosys’ Q1 revenue significantly exceeded expectations, with deal total contract value (TCV) increasing by 87% year-on-year over the last twelve months. Margins were slightly ahead of forecasts, bolstered by a one-off factor.
Motilal Oswal on Infosys
Motilal Oswal has reiterated its ‘Buy’ call on Infosys and raised its target price to Rs 2,000, valuing the stock at 25 times FY26E EPS. The brokerage noted that Infosys’ upgrade in FY25 revenue growth guidance was largely driven by a one-time spike in its India business and inorganic factors.
However, strong deal wins are expected to enhance its medium-term growth outlook. While the company has maintained its margin guidance, Motilal Oswal sees potential for further upside in the medium term, which is viewed as encouraging.
Infosys Stock Performance in Last One Year
In terms of stock performance, Infosys shares have demonstrated positive returns across multiple time frames. Over the past month, the stock has given a commendable 19.79% return, showcasing its stability and growth potential. The last six months have seen even more impressive results, with a substantial increase of 9.12%, indicating a strong upward trend.
Year-to-date, Infosys shares have surged by 16.70%, reinforcing the stock’s positive momentum in the current fiscal year. Looking at the broader picture, the stock has delivered an impressive return of over 22.68% in the last twelve months, emphasizing its sustained growth and attractiveness to investors.
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