Due to ramp up of existing projects coupled with new mega deals, we believe Infosys will achieve higher end of the guidance in FY25E.
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Infosys Ltd. posted above estimates dollar revenue of $4,939 million, up 1.7% QoQ. The broad based growth across verticals continue to persist in this quarter as well like Q2.
This growth acceleration is on the back of improving discretionary spend (specifically in BFSI in US) and large deal ramping up and would continue to be the driving force. Coupled with client's focus shifting on IT investments with focus on AI, cloud adoption, cybersecurity, data and analytics.
Having said that, deal wins are majorly focused on cost optimization and vendor consolidation which would impact the margins. Factoring all the scenarios and pricing strategy, management has upgraded their revenue guidance for FY25 at 4.5%- 5% and margin guidance remained stable at 20-22%.
Due to ramp up of existing projects coupled with new mega deals, we believe the company will achieve higher end of the guidance in FY25E. However, considering Q4 been soft for the company, we maintain Hold rating on the stock with target price of Rs 2,052 (27x FY27E EPS) versus previous target price of Rs. 1,995.
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