Buy Infosys; target of Rs 1712: Geojit Financial Services

Geojit Financial Services research report on Infosys

Infosys Ltd provides IT consulting and software services, including e-business, program management and supply chain solutions. It also offers application development, product co-development, system implementation and system engineering services. Consolidated revenue grew 8.5% YoY to Rs. 44,490cr in Q2FY26, led by strong growth across various business divisions. Specifically, communication grew 10.6% YoY, financial services 10.4% YoY, hi-tech business 13.4% YoY, and manufacturing 14.4% YoY. Revenue from Europe rose 15.7% YoY, North America 6.5% YoY and India 7.7% YoY, while that from the rest of the world declined 0.8% YoY. EBITDA increased 7.4% YoY to Rs. 10,535cr and EBITDA margin contracted 25bps YoY to 23.7% due the cost of technical subcontractors as a percentage of revenue increased from 7.9% to 8.7%. Reported PAT rose 13.2% YoY to Rs. 7,375cr supported by an increase in other income from Rs. 712cr in Q2FY25 to Rs. 982cr in Q2FY26, The company plans to buy back shares worth Rs. 18,000cr through a tender offer at Rs. 1,800 per share, which is expected to be completed in the Q3FY26, pending shareholder approval.

Outlook

We reiterate our BUY rating on the stock, based on 22x FY27E adjusted EPS, with a revised target price of Rs. 1,712.