Infosys rises 2%; CLSA reiterates high conviction buy call

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26 Aug, 2025 12:21

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Shares of Infosys gained 1.9 percent intraday Tuesday after brokerage house CLSA reiterated its high-conviction buy call on the stock, saying it should be a core tech holding.

The brokerage raised its target price on the stock from Rs 2,500 to Rs 2,800 apiece.

"With new management in place, IT services provider Infosys should see stronger revenue growth in FY16/17 as it gains leadership in digital and traditional services while improving client mining. Its realigned operations enable a higher utilisation rate and greater automation while helping to reduce staff attrition," CLSA reasoned.

According to the brokerage, Infosys can create further value via buybacks, a higher payout ratio and smart acquisitions.

CLSA expects Infosys to accelerate revenue growth through leadership in SMAC/digital services (10 percent of revenue growing at 30 percent Y-o-Y), greater participation in scale-services deals (IMS/testing/BPO, representing 22 percent of its business, expanding at 20 percent YoY) and improved client mining.

It estimated Y-o-Y expansion in US-dollar revenue growth of Infosys from 7 percent in FY15 to 15 percent in FY17.

The brokerage expects margin consolidation in FY16 and expansion in FY17. "By shifting to the provision of offshore services and raising utilisation, it has seen margin recovery which can be maintained by realigning the organisation for new disruptive services, raising billing rates, reducing its reliance on subcontractors and increasing utilisation and automation while reducing attrition," it explained.

At 10:51 hours IST, the scrip of Infosys was quoting at Rs 2,234.30, up Rs 4.50, or 0.20 percent on the BSE.