Infosys Ltd. share price target

We recommend a SELL rating on the stock and assign a 20 x P/E multiple to its FY25E earnings of Rs 63.7/share to arrive at a TP of Rs 1,300/share, implying an downside of 11.5% from the CMP.

Infosys reported a largely in-line operating performance, but cut in FY24 revenue guidance is a negative surprise. Revenue grew 1% QoQ CC (I-Sec: 0.8%, cons: 0.8%) and 4.2% YoY CC led by strong growth in manufacturing, partially offset by weakness in BFSI, retail and communication.

FY24 revenue growth guidance slashed from 4-7% to 1-3.5%, implying continued uncertainty a sector-wide phenomenon

Infosys posted an in-line quarter. Revenue grew 1% in cc terms QoQ. EBITDA margin declined by 70bps QoQ to 20.8%. Infosys sharply cut its FY24 revenue growth guidance to 1-3.5% cc YoY (earlier 4-7%), implying 0.2-1.8% CQGR over Q2-Q4, on lower than expected volumes due to ramp-downs in discretionary spend, coupled with mega-deal volumes decreasing on delayed signings and longer ramp-up time due to regulatory approvals and transitions.

Given the company's medium-term challenges on demand and uncertain supply-side constraints, we expect Infosys to report moderate growth in FY24. We recommend investors SELL on the stock until uncertainties settle down.