Buy Infosys; target of Rs 1580: HDFC Securities

HDFC Securities' research report on Infosys

We maintain BUY on Infosys (INFY), following a strong 3Q print (best 3Q in 8 years) and the highest-ever deal wins translating into growth leadership in tier-1 IT. TCV of large deal wins (including largest-ever Daimler deal) stood at USD 7.1bn (net new TCV at USD 5.2bn). Growth in 3Q was led by NorthAmBFSI (Vanguard ramp-up), E&U, Life sciences vertical and NorthAmManufacturing/Communications. INFY scores high on growth visibility based on a staggering 3.5x growth in 9MFY21 net-new large deal TCV over the prior period. Growth ahead is predicated on (1) strong momentum in BFSI (8 large deal wins), (2) 4-4-3 large deal wins in Manufacturing, Communications, E&U verticals, (3) consolidation opportunities and continued growth in digital, driven by improving competitive advantage led by Infosys Cobalt and strong supply-side metrics (80% of digital fulfilment over past 3 years via reskilling).

Outlook

Our target price is Rs 1,580 at 25x Dec-22E (~10% discount to TCS and 24x earlier), supported by 20% EPS CAGR over FY21-23E.