Buy Infosys; target of Rs 1650: ICICI Direct

ICICI Direct's research report on Infosys

Infosys’ volume in the quarter increased 4.6% QoQ but revenue growth was lower by 2% QoQ in constant currency (CC) terms due to offshoring. The revenue growth was across verticals & geographies. Digital revenues increased 5.6% QoQ, 38.6% YoY and now accounts for 51.5% of overall revenues. In terms of deal pipeline, it increased 27.3% YoY to US$2.1 billion. Further, despite wage hike, margins were healthy. In terms of guidance, the company expects FY22E revenues to grow in the range of 12-14% with operating margin in the range of 22-24%. Robust revenue guidance points at strong demand environment.

Outlook

We maintain our BUY rating on the stock with a revised target price of Rs 1,650 (26x P/E on FY23E EPS) (earlier target price Rs 1,610).