Buy Infosys; target of Rs 1650: Motilal Oswal

Motilal Oswal's research report on Infosys

INFO reported muted revenue of USD4.56b in 4QFY24, down 2.2% QoQ in CC terms, below our estimated decline of 0.1% QoQ CC. The weak 4Q was partially driven by a 100bp one-off hit from re-scoping part of work the company does for a large BFSI client. As a result, FY24 revenue growth stood at 1.4%, missing the company’s guided growth band of 1.5%-2.0% YoY CC. The large deal TCV momentum remained intact at USD4.5b (up 2.1x YoY, net new at 44%). The management continues to see a good pipeline of large deals, although the demand environment remains unchanged. Amid persistent weakness in discretionary spending due to caution on macro recovery, INFO provided an underwhelming USD CC revenue growth guidance of 1%-3% YoY for FY25, significantly below our estimates.

Outlook

Despite near-term weakness, we expect INFO to be a key beneficiary of the acceleration in IT spending in the medium term. Based on our revised estimates, the stock is currently trading at 19x FY26E EPS. We value the stock at 22x FY26E EPS, implying a TP of INR1,650.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Infosys - 19042024 - moti