Buy Infosys: target of Rs 1950: Sharekhan

Sharekhan is bullish on Infosys has recommended buy rating on the stock with a target price of Rs 1950 in its research report dated September 08, 2021.

Broker Research

September 09, 2021 / 11:33 IST

HDFC Securities research report's outlook and valuations: "The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."

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Sharekhan's research report on Infosys

Management indicated demand would stay strong for 2-4 years led by clients’ high spends on cloud and digital transformation, urgency for core modernisation and greater offshoring. Q2FY2022 revenue growth to remain strong aided by ramp-up of Daimler deal. Infosys is well-placed to deliver industry-leading revenue growth in FY2022 given broad-based demand, robust deal wins and a healthy deal pipeline. Strategic investments in digital capabilities make Infosys well-placed to participate in clients’ digital transformation journey. We expect USD revenue and net profit to clock a 16% and 17% CAGR respectively, over FY2021-2023E.

Outlook

We maintain a Buy on Infosys with a revised PT of Rs. 1,950 given strong growth potential, healthy deal wins and broad-based demand.

For all recommendations report, click here