Buy Infosys; target of Rs 1730: Sharekhan

Sharekhan's research report on Infosys

Revenue beat led by strong volume growth and market share gains, while margins missed estimates owing to wage revision and supply-side pressures. Net headcount addition and client mining remained impressive, while deal TCVs stayed weak in Q1. Infosys has revised its revenue growth guidance upward by 100 bps to 14-16% in constant currency for FY2023, led by strong revenue growth in Q1, healthy deal pipeline, and higher spending on growth and efficiencies initiatives. However, it lowered its EBIT margin guidance to the lower end of 21-23% band. We believe Infosys is well equipped to maintain its growth leadership among large peers in the medium term, given a portfolio well aligned to growth areas, strong digital capabilities, and solid execution.

Outlook

We maintain our Buy rating on Infosys with an unchanged PT of Rs. 1,730, given strong revenue growth visibility, a set of offering portfolio that are well-aligned to clients’ requirements, and market share gains.