New Delhi: After releasing the first quarter results, Infosys’ share price dropped 1.3% to Rs 1455.55. Analysts anticipate Infosys to report sequential revenue growth in INR in the low single digits and profitability growth in the mid-teens. Additionally, they expect the IT major to report weak quarterly growth in CC terms for Q1FY24E of 0.8%. The price of Infosys stock increased by around 12% in the previous month and decreased by 4% from a year earlier.
“We expect Infosys to post low single-digit sequential growth in revenue in INR terms and mid-teens growth in profitability. However, operating margins are likely to be under pressure owing to soft top-line growth and the impact of wage hikes. We would closely watch FY24 guidance for any signs of moderation, though the balance seems finely hung against the backdrop of deal cancellations and the recent new deal wins,” said Dhruv Mudaraddi, Research Analyst at Stoxbox.
Analysts at ICICI Securities expect Infosys to report soft 0.8% on-quarter growth in CC terms Q1FY24E. With a 20bps cross-currency tailwind, this would imply muted 3.5% on-year growth in US$ terms. The brokerage believes Infosys could narrow its revenue growth guidance to 4-6% in CC terms for FY24 from 4-7% and expect 5.1% CC growth in FY24E with an EBIT margin of 21%. “With the stock currently trading at 18.4X FY25E (same as last 15-yr avg), we see attractive risk-reward for INFY with the expectation of 12.8%/12.4% CC revenue growth in FY25E/26E given its superior digital capabilities, strong partner ecosystem and management execution. Our 12-month target price of Rs1,613 implies 24% potential upside and we reiterate our BUY rating on Infosys,” said ICICI Securities in a report published on June 29.
