Buy Infosys target of Rs 1832: Prabhudas Lilladher

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Prabhudas Lilladher's research report on Infosys

Infy reported growth of 4.8% QoQ CC, 4.7% QoQ USD (Ple: 4.3%, Cons: 3.7%) led by strong broad-based demand across verticals and markets. With full stack differentiated digital portfolio, Infy continues to gain market share reflected by sustained strong growth in digital revenues (9.6% QoQ, 47% YoY USD, 54% of revenue). Strong deal momentum sustained with large deal TCV of $2.6 Bn, +23.8% QoQ, +49.4% YoY. We note that net new wins at 30% were lower vs avg 66% net new in FY21. Infy raised FY22 revenue guidance to 14-16% YoY CC from 12-14%, in-line with our estimates. We had already baked in 17.7%/12% YoY USD growth in FY22/23E.

Outlook

We value Infy at 28x to arrive at a changed target price of INR 1832 (earlier: INR 1738) now on Sep23 EPS of Rs. 65.4. Infy is currently trading at 29.9X/25.8X earnings of INR 52.7/61.1 for FY22/23E respectively with revenue CAGR of 14.8% and EPS CAGR of 15.4% over FY21-23E. We have introduced FY24 estimates to capture sustainable strong demand into our numbers and valuations.

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