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Systematix Report
Brokerage firm Systematx has lowered its FY27E/FY28E/FY29E earnings estimates for Infosys Ltd. by 0.5%-1.8%, factoring in recent performance, cut in upper-end of guidance, higher competitive intensity across industry and client-specific issues.
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At CMP, the stock trades at 14x/13x/12x FY27E/FY28E/FY29E EPS, at a 5% discount to TCS on a one-year forward basis.
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The brokerage has lowered its target PE multiple to 14 times from 15x, considering moderation of organic growth due to client-specific headwinds and pressure on profitability.
However, the stock trades at ~7% FCF yield and a 4.6% payout yield. However, the brokerage has downgraded its rating to Hold from Buy with a revised target price of Rs 1,150, based on 14x Jun-28E EPS.
Infosys Q1 Results Highlights
Infosys' Q1 FY27 revenue growth disappointed due to a 50 bps one-off energies, utilities, resources, services client program termination, though Ebit margin (21.1%), net new deal total contract values, AI revenue, and cash conversion remained positive.
FY27E CC revenue growth guidance was cut from 1.5–3.5% to 1.5–3.0%, with ~1.7% inorganic contribution from acquisitions implying organic growth of approximately -0.2% to +1.3% — driven by softer Q1 volumes, the EURS client termination, an escalating European manufacturing headwind, and competitive pricing pressure.
Infosys is tracking toward a fourth consecutive year of revenue moderation, with FY27E organic growth estimated at just 0.6% QoQ CC.
Salil Parekh will step down as CEO in March 2027, with Ashiss Kumar Dash, an Infosys veteran with deep operating, sales, and technical experience, appointed as his successor in a well-structured transition.
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