Infosys Share Price Today: Infosys stock price dropped on Monday morning as investors reacted to the company’s soft growth in net profit. Infosys, on Sunday evening, informed the bourses that its net profit rose just 3.1 per cent on-year basis in the April-June quarter, missing estimates pinned by Dalal Street analysts. India’s second-largest IT company reported consolidated revenue of Rs 34,470 crore in Q1, which was higher than the analyst estimate of Rs 34,150 crore. On a YoY basis, the revenue jumped 23.6 per cent.
Infosys had upped its revenue guidance during the earnings call after the latest earnings, which majorly has failed to boost morale of the brokerages at large as their target price suggest an upside potential of 2-16 per cent in the stock.
“Infosys reported a subdued performance in 1QFY23 with EBIT margin coming in at 20.1 per cent, 163 bps below our estimate of 20.7 per cent,” said Mitul Shah – Head of Research at Reliance Securities. Analysts, however, still remain bullish on the information technology giant, reiterating their ‘Buy’ calls. Infosys has raised its revenue guidance.
Further, ICICI Securities believes Infosys results hint towards demand normalisation for the IT sector. “Though upgrade in revenue guidance from 13-15 per cent YoY CC to 14-16 per cent (implying CQGR of 1.6-2.6 per cent CC terms) indicates healthy near-term demand, management commentary on pockets of weakness in certain segments such as mortgage, softness in BFSI for last two quarters and lower TCV wins, point towards demand normalisation,” they said. “We do believe Infosys is well positioned to gain market share and is suitably equipped for industry-leading growth. However, elevated margin pressures along with slowing TCV momentum in tandem with the weak macro-environment lead us to retain our HOLD rating,” Analysts added. The target price has been revised down to Rs 1,434 per share.
Morgan Stanley remains overweight on the stocks with a target price of Rs 1,535 on the stock. According to Morgan Stanley, weak margin outlook would offset the growth guidance uptick. Also, the raised revenue guidance is comforting but not enough. “We expect the stock to remain under pressure in the near term.”
Analysts at Kotak Securities are bullish on the stock and draw two key points from the April-June earnings. “EBIT margin decline was not a surprise; however, the decline in manufacturing vertical margins was, and weak TCV points towards a slowdown but is already part of our estimates,” they said. Kotak Securities cut FY2023-25E EPS by 2-4 per cent and Fair Value to Rs 1,690, valuing the stock at ~25X FY2024E EPS. “Maintain BUY — we believe Infosys will continue to lead on growth and with margin improvement from hereon,” the brokerage firm said in a report.
The revenues in constant currency (CC) witnessed a year-on-year growth of 21.4 percent while on a sequential basis, the growth in CC revenues was 5.5 per cent. The company’s revenues from digital businesses, which accounted for 61 per cent of the total revenues, grew by 37.5 per cent on year in CC terms.
CLSA has a buy rating on the stock with target at Rs 1,750 per share. “Healthy demand momentum and cost challenges are likely transient while strong headcount addition and rise in revenue growth guidance reassure demand strength. The company now expects margin at lower end of its 21-23 per cent band. We see miss as optical due to transient factors,” it added.
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