Buy Infosys; target of Rs 1230: HDFC Securities

HDFC Securities' research report on Infosys

We maintain BUY on Infosys (INFY), following a strong 2Q print across revenue, operations and deal wins translating into growth leadership in FY21. Increase in revenue guidance to 2-3% CC for FY21 and margin guidance increase to 23-24% reflect 2Q outperformance and growth visibility for 2H. Growth visibility is predicated on (1) strongest-ever deal wins with large deal TCV at USD 3,145mn comprising USD 2,705mn in new wins (including Vanguard deal), (2) strong commentary on BFSI vertical (five large deal wins ex-Vanguard), Life-science & Hi-tech verticals and recovery in Retail & CPG vertical (three large deals), (3) better supply-side indicators of a wage increase, local hiring program (margin implications), and (4) traction in digital (47.3% of revenue and 25.4% YoY CC), supported by industry tailwinds of cloud migration/DX projects and vendor consolidation.

Outlook

Our target price of Rs 1,230 is based on 23x Sep-22E EPS (15% discount to TCS) with EPS CAGR at 14% over FY20-23E.

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