Analysts give thumbs up to Infosys, raise price target to 4 digits

KS Badri Narayanan Chennai | Updated on July 16, 2020 Published on July 16, 2020

Stock climbs to new high after strong Q1

Shares of Infosys surged to hit a 52-week high at ₹955.50 in early trade on the NSE, as the company came out with strong quarterly numbers and gave guidance after postponing it for a quarter, with the revenue forecast in the range of 0-2 per cent in constant currency.

Net profit zoomed 11.5 per cent to ₹4,272 crore for the first quarter of FY21 on a year-on-year basis on the back of large deal wins. The company's revenues rose 8.5 per cent to ₹23,665 crore.

Analysts turned bullish on the stock and raised their price targets, as the company reported large deal wins, stable EBIT margins and strong revenue growth,

CLSA, which maintained its buy rating on Infosys, has raised the price target to Rs 1,000 from Rs 860, as the Q1 results were well above its expectations. It has raised the FY21/FY22 EPS by 9 per cent on healthy deal wins, stable cash management and an optimistic outlook.

Also read: Infosys net profit up 11% in Q1

JP Morgan maintained its overweight rating, but has increased the target price to Rs 1,000, from its earlier Rs 900. Infosys has outpaced TCS over the last four quarters, JP Morgan said, and added that a tangible improvement in client relevance and superior performance justifies a re-rating.

Macquarie said large deal wins will translate into a faster revenue growth rate in FY21-22. Lower SG&A and travel costs would act as key margin levers. It has raised the price target to Rs 910 from Rs 751.

Infosys should be a key beneficiary in terms of recovery in IT spends in FY22. Additionally, sub-optimal EBIT margin levels and headroom for margin expansion, led by back-ended productivity benefits, should translate to strong outperformance on EPS growth, said Motilal Oswal, which is the most bullish on the stock, with a price target of Rs 1,050.

Also read: Infosys: Margins rise despite higher variable pay


"While we sat through a 21 per cent up-move in the past one month and with a likely gap-up in trade on July 16, we still see a case for further upsides in Infosys over the medium term," said Emkay Global, which has raised the target price to Rs 1,000.

ICICI Securities, which maintained a buy stance with a target price of Rs 1,000, said Infosys has maintained healthy cash flow generation and has a consistent dividend payout policy.

Infy's strategy to focus on new technologies, including AR/VR, cloud, IoT, AI, cyber security and analytics (commonly termed digital) have paid off, said Equirus which has fixed the target price at Rs 800 despite its 'long' call.

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Published on July 16, 2020
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