Infosys on Thursday delivered a surprisingly weak set of numbers for Q4 and missed Street estimates on multiple fronts on the back of unplanned projects rammed down and cancellation across the sectors.
Infosys reported a 7.8% year-on-year (YoY) rise in consolidated net profit at Rs 6,128 crore for the March quarter on a 16% YoY jump in consolidated sales at Rs 37,441 crore.
Analysts tracking Infosys have either downgraded or cut their price targets on the stock, or done both of these after the company's March quarter earnings shocked the street.
Emkay maintained a 'Buy' call on the stock, with a revised target price of Rs 1,620 per share, down from Rs 1,700 earlier. It said, "We believe Infosys is well positioned to capture the growth opportunities across digital transformation, cost efficiency, and consolidation-led deals over the medium term."
Brokerage Religare believes that Infosys' growth may temporarily be muted as it generates 61% and 30% from the American region and Financials service segment. It maintained a ‘Buy’ rating on Infosys, but has cut the target price to Rs 1,855, assigning a PE multiple of 23 times on FY25 EPS.
Brokerage firm Nomura has cut Infosys' earnings estimates for FY25 by 8-9%, driven by lower revenue and margin estimates. It has also downgraded the stock to neutral from the earlier rating of buy and cut its price target by over 22% to Rs 1,290 from Rs 1,660 earlier.
Reliance Securities has downgraded Infosys stock to 'sell’, and also cut its price target to Rs 1,350 from Rs 1,750 earlier. It said that weaker guidance and lower earnings growth led to a contraction in valuations. It expects the cut in spending to continue in FY24 as well.
Ambit has maintained its 'sell' rating on Infosys and cut its price target to Rs 1,340 from Rs 1,505 earlier. It has also warned that the results have raised risks for the sector.
Motilal Oswal has maintained its 'buy' rating on the stock, although it has also cut its price target to Rs 1,520. The brokerage believes that the growth recovery for Infosys is likely to be pushed to FY25 once the demand environment becomes more favourable.
Shares of Infosys closed on Thursday at Rs 1388.60, down 2.79%. The average target for the stock stood at Rs 1,720 ahead of its quarterly results. Data showed Infosys shares traded at 20 times 1-year forward PE multiple, a 3% discount to Nifty IT index.
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