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Motilal Oswal Report
Annual report of Infosys Ltd. suggests that despite the adverse macros, enterprises continue to re-evaluate their cost structure and strengthen their business resilience. Additionally, they are adopting technological investments to foster agility.
Enterprises are shifting their attention toward improving the personalised experience for their customers and delivering distinct value propositions by introducing new products and services.
Key spending areas include Cloud, Generative AI, Cyber Security, Ineternet of Things, and Immersive Technologies.
In this economic downturn, the company continues to maintain close proximity to its clients with its near-shore delivery capabilities and localization strategy.
Valuation and view
Infosys' discretionary business has been adversely impacted by the macroeconomic slowdown over the last few months.
The delayed decision-making and higher deal scrutiny will have a direct impact on the deal conversion. We expect FY24 revenue growth to be around 5.2% YoY in constant currency terms, which falls under the lower end of the guidance range.
Despite near-term weakness, we expect Infosysto be a key beneficiary of acceleration in IT spends in the medium/long term. The stock is currently trading at 18 times FY25E earnings per share.
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