Prabhudas Lilladher's research report on Infosys
INFY reported revenue of USD4.6b, down 2.2% QoQ in CC and down 2.1% in reported terms, below consensus of 0.6% QoQ decline. With 4Q exit FY24 growth translates to 1.4% CC YoY, tad below the lower-end of the guidance band (1.5-2% YoY). The sequential decline was led by re-scoping of large deal within Financial Service vertical that created an impact of 100bps QoQ. Even if we eliminate the one-off impact, the weakness was visible across key verticals and geographies. Despite the softness in revenue growth, deal TCV was attractive at USD4.5b, which translates to a full year TCV of USD17.7b (1.0x).
Outlook
We estimate revenues/earnings CAGR of 4.3%/5.8% over FY24-FY26e. The stock is currently trading at 22x FY26e, we are assigning P/E of 21x to FY26e with a target price of INR 1,375. With that I assume coverage on Infosys with a “HOLD” rating.
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