Sell Infosys; target of Rs 700: Dolat Capital

Dolat Capital's research report on Infosys

We believe that higher sub-contracting cost, higher attrition, implied investment and localisation in the medium term will lead to margin pressure in FY20 for INFY. We expect INFY to report margins towards the mid-point of its guidance in FY20. We downgrade our earnings estimates by 12%/11.5% for FY20/FY21, primarily because of rupee appreciation and margin headwinds going ahead. We change our rupee assumption to ` 70 for FY20/FY21 as compared to ` 74/` 76 earlier which led to major downgrade in our earnings estimate.

Outlook

We downgrade INFY to SELL with revised TP of ` 700 (` 840 earlier) based on 17x one-year fwd. PER.