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ICICI Securities Report
Infosys Ltd.'s Q4 FY24 QoQ constant currency revenue growth was even below our muted estimate (of -1.2%). QoQ revenue growth and margin were impacted by:
one-off impact from banking, financial services and insurance deal renegotiation and
higher discretionary component in portfolio being impacted by weak client sentiment.
The revenue guidance of 1-3% constant currency for FY25 does not leave much room for optimism. Strong total contract value of $4.4 billion is the only silver lining.
We value Infosys at 22 times FY26E earnings per share of Rs 72 to arrive at our revised target price of Rs 1,570 (earlier target price: Rs 1610), implying ~10% potential upside.
We cut our FY25/26E EPS by 1-8% after factoring in Q4 print, In-tech acquisition and bleak outlook. Maintain Add.
Key risks: Slower-thananticipated recovery in discretionary IT spends and continued impact from one-offs.
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