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 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.

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

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.

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.

Key spending areas in FY23 included cloud, generative AI, cybersecurity, IoT, and immersive technologies