Infosys Share Price Updates for July 19, 2024: Infosys share price surge over 3% after Q1 results

Share price of Infosys closed at ₹1,789.35 on the NSE, up 1.78% on Friday. The stock has hit a 52-week high today at ₹1,844.

Infosys stock rose 3.49% on the NSE to trade at ₹1,819.45 as at 12.57 pm.

We expect Revenue/EBITDA/PAT to grow at 10.5%/13.2%/10.7% over FY24-FY26E. We have revised up our FY25E/FY26E EPS by 1.2%/3.5%. We maintain ADD Rating on the stock with revised target price of Rs 1,864 (vs Rs 1,577 earlier) at PE of 24x on FY26E. We have increased target PE multiple from 21x to 24x to account for increased guidance for FY25E and certain green shoots in demand environment.

Shares of Infosys rose 3.40% on the NSE, trading at ₹1,817.90 as at 12.21 pm.

Although the Q1 performance was healthy and remarkable, we would be seeking for an evenly distributed growth rather than a skewing H1 dominated. The higher concentration of discretionary in its business mix is causing more volatility to its vertical portfolio, otherwise we remain positive in its front-end capability and sustainable growth delivery. We are baking in revenue growth of 3.7% and 7.5% YoY CC with margin improvement of 50bps each in FY25E and FY26E, respectively. We estimate revenues/earnings CAGR of 6.0%/9.5% over FY24-FY26E. We believe all positives are factored-in to the CMP. The stock is currently trading at 25x FY26E, we are assigning P/E of 24x to FY26E with a target price of INR 1,680. We maintain HOLD.

Infosys delivered solid results (even adjusting for one-offs) and upgraded its guidance. Management appears upbeat about the recovery in growth profile, though a bit guarded too, as discretionary spends remain largely on hold. We reckon Infosys will benefit disproportionately in FY25/26—from revival in discretionary spends—just like it suffered disproportionately (versus peers) in FY24. We view it as one of the best ways to play the revival in IT sector over next few years. Retain ‘BUY’

Management sounded upbeat, anticipating a recovery in US-BFS and a stronger H1 than H2. We are raising FY25E/26E EPS marginally (< 2%). We are introducing FY27 estimates and rolling forward the valuation to 25x Sep-26E PE, yielding an increased TP of INR2,050 (earlier INR1,720); reiterate ‘BUY

INFO’s FY25 revenue growth guidance upgrade was largely driven by a one-time India business spike and inorganic impact, but strong deal wins should improve its medium-term growth outlook. It has maintained its margin guidance, but continues to see upside potential in the medium term, which we see as encouraging. 

We expect INFO to be a key beneficiary of the acceleration in IT spending in the medium term. We value the stock at 25x FY26E EPS, implying a rounded TP of INR2,000. Retain BUY. 

Shares of this IT major trade at ₹1,811.20 on the NSE, higher by 3.02% as at 10.15 am.

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INFO’s 1Q headline print was strong. Revenues grew 3.6% cc QoQ, exceeding expectations (JMFe: 2.1%). EBIT margin expanded 100bps QoQ (JMFe: 50bps). INFO raised its FY25 cc revenue growth guidance to 3-4% (from 1-3%). There were caveats though in all these numbers. Revenue/margin was aided by one-off benefit of 50bps/40bps. Revised guidance includes in-organic contribution (in-tech acquisition) of c.80bps (JMFe). These one-offs aside, we still find a lot of positives in the result. Core volumes grew after three quarters of decline. BFSI returned to sequential growth after six quarters. Management cited evidence of discretionary spend pick-up in BFS. Our TCV-Revenue waterfall model indicates stability in smaller deal revenues. Quality of revenue improved too. Services revenues (ex pass-through) grew 4.5% QoQ. Organic guidance uplift, though modest, seem driven more by management’s conservatism. Guide implies organic CQGR of 0-0.5% through FY25. Sustained deal momentum (Net new TCV up 83% YoY) and uptick in short-cycle deals should drive better growth. We build 5% growth and see high probability of upward revision in the guide. Better momentum flows into FY26/27E estimates driving 2-7% EPS upgrade for FY25-27E. For INFO at least, this seems like the beginning of earnings upgrade cycle. That should drive multiples higher. We now value the stock at 27x EPS (from 23x) – at 1-SD above its past-5 year median. Reiterate BUY with a revised TP of INR 2,010. 

Bengaluru-headquartered IT services giant Infosys beat market expectations with sequential revenue growth of 3.6 per cent quarter on quarter (QoQ) in constant currency (CC) during the first quarter of the fiscal year 2024-2025. The company has significantly improved its guidance and expects a revenue growth of 3-4 per cent in constant currency in FY25, up from the 1-3 per cent it had guided earlier. 

Investors need to reconcile the logic of paying the same valuation for Infosys as compared to two years back when growth was significantly better

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Nomura on Infosys

Buy Call, Target Raised To Rs 1,950

Q1FY25 Was An All-round Beat

Surprise Revenue Guidance Driven By Strong Start, Deal Wins, & Acquisition Integration

Project Maximus’ Impact On Margin Continues To Play Out

Raise Our FY25-26 EPS By Nearly 2-3%, Reiterate As Top Pick

Jefferies on Infosys

Buy Call, Target Raised To Rs 2,040

Q1 Beat Estimates, Driven By Strong Revenue Growth Of 3.6% QoQ

Co Has Raised Its FY25 Growth Guidance Which Seems Conservative In Context Of Strong Deal Wins

Initial Signs Of Recovery In BFSI, Strong Deal Wins Suggest The Worst Is Behind

All-Round Improvement In Operating Performance Suggest The Worst Is Behind

Raise Estimates By 3-4% & Expect Co To Deliver 10% EPS CAGR Over FY24-27

Bernstein on Infosys

Outperform Call, Target Raised To Rs 2,100

Delivered Its Strongest Beat In 10 Quarters In Q1 Across Revenue, Margin & EPS

FY 25 Revenue Guidance Was Raised To 3% To 4% YoY CC (From 1% To 3%)

Deal Momentum Was Strong At $4.1 Bn TCV With Net New Of 57

See Beginning Of An Upcycle Trend As Growth Recovers, BFSI Inflects & AI Deals Scale Up

JPM on Infosys

OW, TP Rs 1950

1Q perfect foil to a poor 4Q24, handsomely beating rev/margin/EPS/FCF &upgrading guide with some +ve one-off revenues/margins

Cos’ new revenue guidance of 3-4% parses out as 2.3-3.3% organic implies 0.8-1.5% CQGR

GS on Infosys

Buy, TP Rs 1870

1Q beat: Upside risks to guidance

INFY 1Q, coupled with commentary from some of its peers, suggest demand environment is incrementally getting better

Expect FY25E reve growth for Infy/sector to be c.400 bps higher vs FY24

CITI on Infosys

Buy, TP raised to Rs 1850

1Q revenue came in well above expectations; Deal TCV +87% yoy LTM.

Margins were slightly ahead, aided by one off.

Infosys stock traded at ₹1,800.80 on the NSE, higher by 2.43% as at 9.33 am.