Hold Infosys; target of Rs 845: ICICI Direct

ICICI Direct's research report on Infosys

Infosys reported a healthy set of numbers in Q1FY20 with revenue above our expectations and in-line margins. The key highlights of the quarter were, strong large deal wins (up 1.7x QoQ to $2.7 billion) and robust growth in digital revenues (up 39.4% YoY & 8.1% QoQ). Further, owing to the healthy start, Infosys has raised its constant currency revenue growth guidance to 8.5-10% (from 7.5-9.5%) for FY20E while maintained operating margin guidance of 21%-23%.

Outlook

However, recent run up in stock prompt us to downgrade the stock from Buy to HOLD with a target price of Rs 845 (based on 19x FY21E EPS).