Analysts have retained their bullish view on Infosys despite the IT major reporting lower-than-expected financial results for the quarter ended March 31. The firm on Wednesday posted a 12 per cent year-on-year (YoY) growth in net profit (after minority interest) at Rs 5,686 crore against Rs 5,076 crore in the same quarter last year.
On the other hand, the revenue of Infosys increased by 22.70 per cent YoY to Rs 32,276 crore. The top line of the company grew 1.3 per cent on a quarter-on-quarter basis (QoQ), while net profit fall 2.1 per cent.
Shares of the company settled 0.41 per cent up at Rs 1,748.65 on April 13, while the benchmark equity index BSE Sensex settled 237.44 points lower at 58,338.93.
While commenting on Infosys, Motilal Oswal Financial Services said, “We have lowered our FY23 and FY24 EPS estimate by 5 per cent on slower growth and margin pressure. However, we view Infosys as a key beneficiary of an acceleration in IT spending, given its capabilities around cloud and digital transformation. We value the stock at 28 times FY24E EPS and reiterate our Buy rating.”
It has set a target price of Rs 2,000 for Infosys, indicating an upside of 14 per cent from the current market price.
ICICI Securities said, “Infosys revenue and margin numbers were below our estimates for Q4.”
Meanwhile, Infosys’ operating profit increased 8 per cent YoY to Rs 6,956 crore in Q4FY22. However, the figure declined by 7 per cent on a QoQ basis. The operating margin fell to 21.50 per cent in the March quarter against 24.50 per cent in the corresponding quarter last year and 23.50 per cent in the sequential quarter ended December 31, 2021.
Infosys gave guidance for revenue growth of 13-15 per cent in constant currency and an operating margin of 21-23 per cent for FY23. The company ended FY22 within the guided range which means revenue of Infosys grew by 19.7 per cent in constant currency terms against the guided range of 19.5-20 per cent while the EBIT margin for FY22 was 23 per cent against the guided range of 22-24 per cent.
Japanese brokerage firm Nomura also retained a ‘Buy’ call on Infosys with a target price of Rs 2,050. “We lower FY22-24F EPS by around 5-7 per cent primarily on our lower margin expectations. We expect Infosys’ revenue growth to continue to outpace that of TCS in FY23F,” Nomura said.
Mitul Shah, head of research, Reliance Securities said, “Infosys reported a subdued Q4FY22 performance. Revenue and margins both were below our expectations. Considering the industry-leading double-digit revenue growth, the rising share of digital business (58.5 per cent of revenue), elevated EBIT margin levels against pre-Covid levels and a consistent capital allocation policy, we have a ‘Buy’ recommendation at present with a 1-year target price of Rs 2,250, valuing the stock at 30 times FY24E earnings.”
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