Infosys share price soared 4% on Thursday morning to trade as the top Sensex gainer as investors reacted to the quarterly results posted by the company. The second-largest IT services firm said its consolidated net profit grew 11.9% on-year basis in the July-September quarter to reach Rs 5,421 crore. Infosys reported a 20.5% jump in revenue to Rs 29,602 crore in the quarter under review from Rs 24,570 crore in the year-ago period while announcing an interim dividend of Rs 15 per share. Infosys share price has soared 37.6% so far this year, to now sit at Rs 1,785 per share.
“Our stellar performance and robust growth outlook continue to demonstrate our strategic focus and the strength of our digital offerings,” said Salil Parekh, CEO and MD of Infosys. He added that given the continued momentum, Infosys has further increased its revenue growth guidance to 16.5%-17.5%. Margin guidance has been retained at 22%-24%.
Should you buy or sell?
Kotak Securities – Buy
Fair value – Rs 2,000
Analysts at Kotak Securities believe Infosys is a ‘prince among peers’ after an all-round performance by the company. The brokerage firm has increased revenue estimates for Infosys and marginally raise EPS estimates. “We forecast good double-digit revenue for the next three years. We raise Fair Value to Rs 2,000, valuing the company at ~30X September 2023E EPS. Infosys is well-equipped for industry-leading growth in the medium term. Infosys will be at the forefront of – (1) core transformation deals, and (2) managing digital journey of clients,” they added. The fair value set by Kotak Securities implies an upside of 12%.
Emkay Global – Buy
Target price – Rs 1,910
Emkay Global said that they liked the broad-based revenue growth, upward revision in FY22 revenue growth guidance, healthy deal intake, and margin resilience of Infosys. The IT major managed to sign 22 large deals during the quarter, indicating that the deal pipeline remains healthy, with a good mix of new and renewal deals offering good revenue visibility, said Emkay Global. “We increase earnings estimates by 0.4%/0.6%/0.4% for FY22/FY23/FY24, factoring in Q2 performance. We maintain Buy with a TP of Rs1,910 at 28x Sep’23E EPS, considering strong earnings momentum and robust demand environment,” they said.
Yes Securities – Buy
Target price – Rs 2,026
Infosys’ revenue and EBIT margins during the quarter under review were higher than estimates pinned by Yes Securities. Analysts believe that feal booking remains strong and would support growth momentum. “There are near term margin headwinds as employee attrition has sharply picked up. We expect it to report revenue CAGR of 14.9% with average EBIT margin of 24.7% over FY22‐ FY24. We maintain BUY Rating in the stock with a revised target price of Rs 2026,” they added.