Accumulate Infosys; target of Rs 2094: KR Choksey

KR Choksey's research report on Infosys

Dollar Revenue was up 6.3% QoQ and in CC term grew by 21.5% YoY to USD 4,250mn (KRChoksey est. USD 4,136mn). Rupee revenue grew by 7.7% QoQ to INR 318,670Mn (KRChoksey est. INR 310,343Mn). Reported operating margin witnessed a meagre de-growth, down by 7bps to 23.5% QoQ. Infosys has raised FY22 revenue growth guidance by 250-300bps to 19.5-20% (earlier 16.5- 17.5%), implying 0.5-2% QoQ growth in Q4. Infosys’ strong broad-based revenue growth in a seasonally soft quarter clearly reflects the confidence clients have in the company’s capabilities, leading to consistent market share gains and company’s operating margin guidance remains the same at 22%-24%.

Outlook

Factoring strong performance, confident commentary and upgrade in guidance, we are assigning a P/E multiple of 28.5x to the FY24 estimated EPS of INR 73.6 to arrive at a target price of INR 2,094 per share, an upside of 10.4% over the CMP. We change our rating to “ACCUMULATE” from “BUY” rating to the stock.

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