Buy Infosys; target of Rs 1000: ICICI Direct

ICICI Direct's research report on Infosys

Infosys reported a healthy set of Q1FY21 numbers both on the revenue and margin front. Further, the Q1FY21 performance was better than TCS’ Q1FY21 numbers. The company reported a 2.4% QoQ dip in dollar revenues (above our estimate of decline of 5.5% QoQ) vs. TCS that reported 7.1% QoQ dip in dollar revenues. In terms of margins, EBIT margins improved 149 bps to 22.7% (above our estimate of 20.9%) vs. TCS that reported 149 bps dip in margins. The company’s large deal signings have increased 5.5% QoQ to US$1.74 billion. Digital revenues have increased 3.6% QoQ, 24.1% YoY to US$1389 million and now contributes 44.5% of total revenues. In terms of guidance, the company expects 0-2% growth in revenues in constant currency terms and operating margins in the range of 21-23%.

Outlook

We remain positive on the stock and maintain our BUY rating on the stock with a target price of Rs 1000/share.

Infosys 19072020-icici