Buy Infosys; target of Rs 1610: ICICI Direct

ICICI Direct's research report on Infosys

Infosys reported a healthy set of Q3FY21 numbers. Dollar revenues increased 5.3% QoQ vs. our estimate of 3.3% in constant currency terms. Once again in this quarter, the company has outperformed Tata Consultancy Service (TCS) in terms of revenue growth. Infosys also reported flat QoQ margins despite headwinds of large deal transition cost and higher sub con cost. In terms of guidance, the company has revised its FY21E revenues guidance upwards from 2-3% to 4.5-5% and operating margin guidance to 21-23% from 24-24.5%.

Outlook

Hence, we maintain our BUY rating on the stock with a revised target price of Rs 1,610 (25x P/E on FY23E EPS) (previous target price was Rs 1450).