Versent acquisition: Infosys is among Nomura's top IT picks; here's why

Infosys recently announced its acquisition of a 75% stake in the Versent group, a wholly owned subsidiary of Telstra, focusing on cloud and digital transformation services in Australia. This strategic move aims to strengthen Infosys's foothold in the region's IT sector, aligning with its growth objectives.

The acquisition involved Infosys paying AUD 233 million for its stake, with Versent having reported a turnover of AUD 211.4 million in FY25. Telstra retains a 25% stake in the entity. The deal, pending regulatory approval, is expected to close in the second half of FY26. Nomura estimates that the acquisition could contribute approximately $70 million to Infosys's revenue in FY26.

According to Nomura, "the deal strengthens Infosys’s partnership with Telstra which is a key account for the company in its telecommunications vertical." The partnership with Telstra has been solidified through key deals over the past two years, notably in FY24 and FY25. This collaboration is expected to enhance Infosys's business presence in Australia, allowing it to engage more effectively with private and government clients.

Nomura highlights Infosys as a top pick in India's large-cap IT space. The brokerage firm maintains a 'Buy' rating, projecting a target price of Rs 1,880, which is based on 25x FY27 forward earnings per share (EPS). The stock is currently valued at approximately 19x FY27 EPS of Rs 75.20, offering a notable dividend yield of around 4.4%.

"Infosys is one of our top picks in the large-cap India IT space; retain Buy," stated Nomura. The view underscores the confidence in Infosys's strategic direction and its potential for sustained growth.

Nomura projects a 3.8% year-on-year dollar revenue growth for Infosys in FY26, excluding the contributions from the Versent acquisition. This outlook reflects Infosys's broader strategy of leveraging both organic and inorganic growth avenues to enhance its market positioning.

The acquisition is also expected to strengthen Infosys's abilities in cloud and digital transformation services, areas that are seeing increasing demand across various sectors, including government, finance, and utilities. This positions Infosys favourably within the competitive IT services landscape.

As Infosys continues to expand its strategic partnerships and service offerings, the market will keenly observe its performance vis-à-vis competitors like Cognizant, which is also highlighted as a top pick by Nomura in the large-cap IT sector.