Buy Infosys Stock: Nearly 30% Rise in Infosys Shares After Q4 Results, Despite Weak Growth
IT major Infosys reported weak sequential growth of 1.2% in the fourth quarter of FY22 due to seasonality, the impact of the COVID-19 pandemic and customer provisions, it said. analysts said. Despite moderate growth in the last quarter of the prior year, analysts said demand remained intact and the order book remained strong. Research and brokerage firms such as Motilal Oswal Financial, Emkay Financial Services and Reliance Securities have assigned buy ratings to the stock and see up to 28.7% upside potential in the IT stock, at the future. Infosys recorded a 12% year-on-year growth in net profit to Rs 5,686 crore in the January-March quarter, while revenue jumped 22.7% to Rs 32,276 crore. It also recommended a final dividend of Rs 16 per share.
Motilal Oswal Financial Services
Buy, Rally: 14%
Motilal Oswal Financial Services lowered its FY23/24 EPS estimate by 5% due to slower growth and margin pressure. He sees Infosys as a key beneficiary of accelerated IT spending, given its capabilities around cloud and digital transformation. The brokerage firm values the stock at 28x FY24E EPS and reiterates its buy rating. He noted that management’s growth forecast for FY23 and high headcount increases provide additional visibility upon request. He expects the IT major to deliver a margin above its benchmark range, with strong growth and reduced reliance on contractors as attrition declines.
Emkay Global Financial Services
To buy; Gathering: 12.7%
Operating performance remained weak due to seasonality, a Covid-related impact at the beginning of the quarter and a customer-related contractual provision (likely to be recovered in FY23). The research and brokerage firm cut FY23/24 estimates by 7.2%/4.9%, taking into account the fourth quarter miss and lower margin guidance. The poor operational performance would weigh on the title in the short term. He recommended buying the stock with a revised target price of Rs 1,970 at 28x Mar’24E EPS, given widespread demand, stable market share gain and robust cash generation. . Infosys guided CC growth of 13-15% YoY in FY23, implying a compound quarterly growth rate (CQGR) of 2.7-3.4%. EBITM (earnings before interest, tax and management) should be between 21 and 23%.
To buy; Rally: 28.7%
Infosys reported moderate performance at 4QFY22. Revenues, as well as margins, were below Reliance Securities’ expectations. Given the double-digit revenue growth, the growing share of the digital business (58.5% of revenue), high EBIT margin levels compared to pre-Covid levels and a capital allocation policy Consistently, the research and brokerage firm has a buy recommendation now with a 1-year target price of Rs 2,250, valuing the stock at 30x FY24E earnings.
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