Buy Infosys: target of Rs 2050: Sharekhan

Sharekhan is bullish on Infosys has recommended buy rating on the stock with a target price of Rs 2050 in its research report dated October 13, 2021.

Broker Research

October 14, 2021 / 13:50 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

Beat our estimates across financial parameters; Large deal TCVs declined 16% q-o-q, but management indicated that the deal pipeline remains strong; net headcount addition, client additions, and utilisation remained strong. Management has increased FY2022 CC revenue growth guidance to 16.5-17.5% from 14-16% earlier, broadly in-line with our expectations. EBIT margin guidance was maintained at 22-24%, as expected. Infosys is well placed to deliver industry-leading organic growth among large peers in the medium term, given broad-based demand, strong deal pipeline, and market share gains. Net profit to report a 15% CAGR over FY22-FY24E.

Outlook

We maintain Buy on Infosys with a revised PT of Rs. 2,050, given strong earnings growth potential, a robust deal pipeline, and strong demand.

For all recommendations report, click here