Drop in Infosys Shares Analysts anticipate a future rally of 60 percent following the analyst meetin
In its analyst meeting, Infosys reiterated its guidance for FY23 revenue growth of 13 to 15% YoY. By reiterating that the long-term prospects appear promising, management assuaged investor fears about growth. Despite macro headwinds, they claimed they are not observing any softening in demand. Future growth, according to Infosys, will be driven by cloud and digital, with regions like Europe experiencing faster development. The business also argued that they have several levers at its disposal to generate high profits and are well-positioned to expand its market share and provide value.
Following the analysts' meeting, the on BSE dropped 2.19 percent intraday to Rs. 1,471 from its previous close of Rs. Later, Infosys shares closed 1.67 percent lower on the BSE at Rs. 1,478.90. Compared to 5-day moving averages, Infosys's share price is higher, but it is lower compared to 20-day, 50-day, 100-day, and 200-day moving averages. The large cap stock has gained 6.48 percent in a year and fallen 21.82 percent since the start of this year.
On the BSE, 4.35 lakh shares totaling Rs 64.95 crore were exchanged. The company's market value on the BSE decreased to Rs. 6.22 lakh crore. On January 17, 2022, the stock reached a 52-week high of Rs 1953.70, and on June 2, 2021, it reached a 52-week low of Rs 1362.20.
According to the IT major, Europe will be a key growth driver since large organizations there are becoming more open to considering digital transformation and a global delivery model.
A few analysts present at the meeting have kept their "buy" ratings on the company, with price targets indicating possible gains of between 20 and 60 percent.
Edelweiss predicted that FY23 should have stronger growth than FY22. In both FY24 and the first half of FY25, it experiences rapid growth. Beyond that, there is currently no visibility. Additionally, even if a macro downturn occurs, we think that customers will take advantage of the chance to invest in IT to increase efficiency and win market share, much like they did during COVID," the report added, recommending an unaltered target of Rs 2,426—an increase of nearly 60%.
While growth in the March quarter was subdued, demand held steady, and Infosys' order book was healthy, according to analysts at Motilal Oswal. Additional demand insight is provided by the management's significant headcount addition and FY23 growth plan. "As attrition declines, we anticipate Infosys to deliver profitability on the higher half of its projection band, with solid growth and decreased reliance on subcontractors. We anticipate that the company will significantly benefit from an increase in IT spending. The stock is currently selling at 21 times FY24E EPS based on our updated projections. We value the company at 28 times FY24 EPS, which implies a target of Rs 2,000, the authors added, representing a potential gain of 33%.
Following the analyst meeting, financial services company Emkay Global awarded the stock a buy recommendation with a potential upside of 31% (or Rs 1,970) over the stock's current market price of Rs 1,504.
According to JM Financial Services, "We reduce our dollar revenue growth expectations to factor in unfavorable cross currency swings and realign exchange rate to 77 per dollar, delivering a 1-1.5 percent drop to our FY22–24 EPS." Even as we move forward to June'24, we retain BUY with a lowered objective of Rs 1,800 (down from Rs 1,970 before), a lower PER of 26 times, and a 10% discount to our target PE for TCS.
The importance of enterprise-wide digital transformation initiatives was underscored by Infosys, according to analysts at IIFL Securities, and is driving demand momentum despite ongoing macro concerns. With a healthy recruiting forecast, a healthy order book, and an expanding deal pipeline, the management is confident in its ability to meet its FY23 revenue growth guidance of 13–15% on-year. Its priority shortly is to satisfy demand and increase wallet share in comparison. Analysts stated that the company's EBIT margin guidance of 21–23% for FY23 is in line with rivals. "INFO remains our top large-cap selection in the sector," the brokerage stated. "We estimate INFO to achieve top quartile USD revenue/EPS Cagr of 15%/17% over FY22-24ii." It kept a "buy" recommendation on the stock with an Rs. 2,000 target price.