Reduce Infosys; target of Rs 1300: Sharekhan

Sharekhan's research report on Infosys

Infosys reported revenue at $4617 million, up 1% q-o-q/4.2% y-o-y in CC in line with our estimates of $4613 million. Sequential growth was led by Manufacturing, Hitech and Energy verticals. EBIT margins fell 20 bps q-o-q to 20.8% in line with our estimates. Large deal TCV wins stood at $ 2.3 bn, up 11%q-o-q /35% y-o-y. Management sharply downgraded the FY24 constant currency revenue guidance to 1-3.5% from earlier stated guidance of 4-7%. However, the management retained the operating margin guidance for the FY24 at 20-22%.

Outlook

Infosys has consecutively disappointed with significant revenue guidance downgrade for FY24 and is expected to underperform industry peers like TCS and HCL Tech, leading to trimming of target estimates. Thus, we have downgraded the stock to Reduce from HOLD with revised Price Target of Rs 1300. At the CMP, the stock trades at 25.3x/23.5x FY24/25E EPS.