Infosys slips below HUL in m-cap race; stock tanks 4% after FY24 guidance

Infosys, the second latest IT firm and the fifth most valued stock on Dalal Street, plunged over 4 per cent in Friday's trade, slipping below Hindustan Unilever Ltd (HUL) in the market capitalisation race.

The IT stock fell 4.26 per cent to hit a low of Rs 1,402.10 on BSE after a second straight quarter of guidance cut. It commanded a m-cap of Rs 5,93,152 crore against Rs 6,07,845 crore on Thursday. HUL, on the other hand, edged 0.15 per cent lower to Rs 2,556.55. The FMCG major, which is scheduled to report its September quarter results on October 19, was commanding a m-cap of Rs 6,00,685 crore today compared with Rs 6,01,578 crore on Thursday.

"We prefer to remain on the sidelines, given limited line of sight on recovery," said InCred Equities.

This brokerage has trimmed its estimates for Infosys to account for guidance revision and modelled in a 6.1 per cent dollar revenue CAGR over FY24-26F and a 11 per cent PAT growth annually over the same period.

"Though we maintain our Hold rating, rolling forward the valuation to FY26F earnings drives an increase in our target price, despite retaining target PE/G multiple at 1.8 times. Better execution, cash conversion, healthy return ratios & payout provide cushion," it said.

On Infosys, IIFL Securities said it was shifting focus towards recovery in FY25 driven by its order book and that an attractive dividend yield (4 per cent) may provide downside support to Infosys valuations. It maintained 'Buy' on Infosys but expects its discount to TCS to remain elevated and continues to prefer latter.

Equirus said that factoring in a material relative underperformance in Infosys’s share price in in 2023 against most of its peers and likely turnaround in industry demand over medium term, it has maintained its 'LONG' rating on the stock with a revised December 2024 target of Rs 1,610.

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