YES Securities' research report on Infosys
Infosys (INFO) reported broadly inline performance for the quarter. The revenue growth was above estimates; while EBIT margin was inline with expectation. It reported decrease in revenue by 1.0% QoQ in cc terms. Revenue decreased by 1.2% QoQ in USD terms (down 0.4% QoQ in INR terms). EBIT margin decreased by 71 bps QoQ to 20.5% on impact of wage hike during the quarter. The near term demand environment remains challenging as clients remain cautious regarding the evolving macroeconomic situation in the US and Europe and there has been slowdown in discretionary tech spending in sectors such as Hitech, Retail, Telecom, etc. and it continues to impact near term revenue performance. Management has lowered FY24E revenue growth guidance to 1.5% to 2.0% in cc terms from earlier guidance of 1.0% to 2.5% on account of near term demand concerns. Employee attrition continues to decline and should support operating margin going ahead. We estimate revenue CAGR of 11.2% over FY23‐26E with average EBIT margin of 21.9%.
Outlook
We maintain our BUY rating on the stock with revised target price of Rs 1,870/share at 22.5x on FY26E EPS. The stock trades at PER of 20.88x/18.0x on FY25E/FY26E EPS.
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