Infosys share price today: Shares of Infosys Ltd rose marginally to Rs 1,489 on the BSE in early deals on Friday after the IT company reported better-than-expected 13 per cent profit in December quarter. It also raised its annual sales forecast on a strong deal pipeline, even as it warned of “constraints” in some verticals amid a slowing global economy.
Consolidated net profit rose to Rs 6,586 crore in October-December 2022 from Rs 5,809 crore a year ago.
IT bellwether expects revenue growth of 16-16.5 per cent for the current fiscal, as against the earlier estimate of 15-16 per cent growth despite “changing global conditions”.
However, at 21.5 per cent, the margin was lower than the 21.6 per cent expected by the road. It was unchanged on a sequential basis.
CLSA said the company’s FY23 revenue growth guidance points to a stable near-term demand outlook, despite a modest upgrade. The Bengaluru-headquartered company has reported revenue growth in all the three quarters of this financial year, which is another positive for the company. The Hong Kong-headquartered investment group said big deal wins attract a health outlook.
Should you invest?
“Despite winning a healthy deal, Infosys’ upward revision in growth guidance of 16-16.5% in FY23 implies a softer 4Q. Slow hiring also reflects growing caution. We raise our FY23 -25 estimates by 2% and expect Infosys to deliver 13% EPS CAGR in FY23-25. Infosys’ strong execution positions it favorably to gain market share, with strong deal booking and consistent execution providing comfort amid uncertain macros. Maintain buy with a target price of ₹1,770/share,” Jefferies said in a note.
“INFO will be a key beneficiary, given strong IT spends FY23E. Strong portfolio, diversified service line and aggressive outlook of the companies gives us confidence to deliver top quartile revenue growth performance in FY23 as well. We believe once margin pressure eases in 1QFY23, we will see sustainable margin expansion thereafter. Strong pay-out policy and in turn consistent buyback to support valuations. We value the company at 22x FY25 EPS, which implies a TP of 1730. Buy Hold,” said DAM Capital.
Despite client caution due to widespread uncertainty, deal wins and the pipeline remain strong. Some verticals like retail, hi-tech, mortgage and telecom have been more affected. However, instead of cutting IT spending, enterprises are increasingly undertaking cost-takeout deals to drive efficiency, especially in affected industries,” Edelweiss said.
“We maintain a positive stance on the sector. We see strong sustainable demand (transformative/cost-takeout deals) driving revenue growth and margin tailwinds to support higher earnings growth over the next three years. Valuations, no longer costlier Owing to, the risk-reward profile makes it an attractive ‘Buy/So’ with a TP of INR1,900,” he added.
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