Emkay Global Financial has given Buy recommendation for Infosys with a target price of Rs. 1970 in its research report issued on Apr 14, 2022

Emkay Global Financial’s report on Infosys

Q4FY22 operating performance missed our expectations. Revenues grew by a mere 1.2% QoQ CC, while EBITM declined 190bps to 21.6%. Operating performance remained weak due to seasonality, a Covid-related impact in the early part of the quarter and a clientrelated contractual provision (likely to be recovered in FY23). Infosys has guided for 13-15% YoY CC revenue growth in FY23, implying a healthy 2.7- 3.4% CQGR on the back of broad-based demand, robust deal intake and pipeline, and progress in client mining efforts. It has guided for 21-23% EBITM for FY23 (vs. 23% in FY22), considering wage inflation, planned investments and uptick in travel/other costs. Large deals intake remained healthy at USD2.3n in Q4FY22 (48% net new) and USD9.5bn in FY22 (40% net new), giving good growth visibility for FY23. The deal pipeline remains healthy across deal sizes (highest ever for large deals). We cut FY23/FY24 estimates by 7.2%/4.9%, factoring in the Q4 miss and lower margin guidance. The operating performance miss would weigh on the stock in the near term.

Outlook

We maintain Buy with a revised TP of Rs1,970 at 28x Mar’24E EPS, considering broad-based demand, steady market share gain and robust cash generation.

More Info

At 17:30 Infosys was quoting at Rs 1,748.65, up Rs 7.20, or 0.41 percent.

It has touched an intraday high of Rs 1,759.45 and an intraday low of Rs 1,732.25.

It was trading with volumes of 201,207 shares, compared to its thirty day average of 359,607 shares, a decrease of -44.05 percent.

In the previous trading session, the share closed down 1.43 percent or Rs 25.20 at Rs 1,741.45.

The share touched its 52-week high Rs 1,953.70 and 52-week low Rs 1,311.80 on 17 January, 2022 and 14 May, 2021, respectively.

Currently, it is trading 10.5 percent below its 52-week high and 33.3 percent above its 52-week low.

Market capitalisation stands at Rs 735,611.35 crore.

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