Buy Infosys; target of Rs 1690: Sharekhan

Sharekhan's research report on Infosys

Infosys reported revenue at $ 4718 million, up 2.3% q-o-q / 2.5% y-o-y in cc exceeding our estimates of 0.7% q-o-q CC revenue growth in a seasonally strong quarter led by growth across Lifesciences, Manufacturing and Retail vertical. EBIT margin improved ~40 bps q-o-q to 21.2 %, beating our estimates of 20.7% aided by benefits of its margin improvement plan. Company reported highest ever large deal TCV wins at $7.7 billion with net new deal TCV at 48%. Management has cut the FY24 CC revenue guidance to 1-2.5% from 1-3.5%. However, the management has retained EBIT margin guidance for the financial year at 20-22%. We believe the large deal signing and strong pipeline are setting the tone for growth and acceleration beyond FY24 and we see Infosys as a beneficiary of a recovery in discretionary spends and vendor consolidation, given its strong execution track record and capabilities.

Outlook

Hence, we maintain a Buy on Infosys with an unchanged PT of Rs. 1,690. At the CMP, the stock trades at 21.1x/18.4x its FY25/26E EPS.