Infosys share price dipped 11 per cent to ₹1,225.20 on NSE, hitting the lower circuit, after it opened on Monday. This comes as the company posted results below the market estimate.
IT major Infosys reported a 7.8 per cent year-on-year (y-o-y) rise in its fourth quarter (Q4 FY23) net profit at ₹6,128 crore, missing street expectations. On a sequential basis, the profit dipped 7 per cent from ₹6,586 crore in Q3, weighed down by a tough macro-environment.
Revenue from operations stood at ₹37,441 crore, indicating a 16 per cent y-o-y rise; and on a quarter-on-quarter (q-o-q) basis, it dipped 2.3 per cent from ₹38,318 crore in Q3. In constant currency terms, the company’s revenue rose 8.8 per cent y-o-y and dipped 3.2 per cent q-o-q.
“IT services are expected to have lower demand in the near term. As compared to North America, Europe is expected to have resilient demand and positive investment to continue. As these uncertainties will settle down in the next two to three quarters, the demand scenario will gain momentum once again and would be backed by consistent deal wins. We recommend a SELL rating on the stock and assign a 21x P/E multiple to its FY25E earnings of ₹68.4/share to arrive at a TP of ₹1,350/share, implying a downside of 3 per cent from the CMP,” Axis Securities said in a note.
“We lower our FY24-26E EBIT forecasts by up to 11 per cent and EPS by up to 7 per cent on account of higher other income. We lower our target price by 7 per cent to ₹1,641 (from ₹1,759), implying an 18 per cent upside, and maintain our BUY rating on the stock,” ICICI Securities said in a note.
HDFC Securities had said, “We reckon that there’s a high probability of INFO delivering the mid-point of its guidance band and improving its growth trajectory beyond. We also believe that there’s a low probability of structural risk to the margin. However, recent senior-level exits and the possibility of continued stress from large accounts are risks to growth. We cut estimates by 4-5 per cent and downgraded INFO to ADD (from BUY earlier). Our revised TP of ₹1,470 is based on 21x Dec-24E (25x earlier) which is a 20 per cent discount to TCS’ valuations based on relative growth discount.”