Shares of Infosys settled 1.17 per cent lower at Rs 1,410.95 on April 3 over their previous close of Rs 1427.70. On a year-to-date (YTD) basis, the stock has slipped 7.44 per cent and lost 24.19 per cent in the past year. The IT major would declare its Q4 FY23 (March quarter 2022-23) earnings on April 13, 2023. Brokerages expected Infosys to clock double-digit year-on-year (YoY) growth in the said quarter.
Analysts largely remained ‘positive’ on the counter. For Infosys, one analyst recommended a ‘Buy’ call, while another suggested to ‘go long’ at current levels. Support level could be seen around Rs 1,383, one more analyst said.
Sumit Pokharna, Research Analyst and Vice-President at Kotak Securities, said, “Investors are closely focusing on upcoming IT sector quarterly results. They are waiting to listen to the company’s guidance for FY2024E, demand and margin outlook, deal wins, deal pipeline, cost take-outs, etc. We believe Infosys is better placed in the Tier-I IT services company. Infosys’ business is well-positioned in the current demand environment. Infosys can drive both modernisation and cost-efficiency focus for enterprises. The portfolio of services is well aligned with clients’ spending priorities in the tech upgrade cycle with lower legacy drag. A robust client base, strong digital capabilities and excellent large-deal capability with the ability to cater to multiple cost take-out themes will help Infosys gain share. We expect its earnings to grow by 15 per cent in FY24E and 15.90 per cent in FY25E. We have a ‘Buy’ recommendation for Infosys.”
Ravi Singh, Vice President and Head of Research, Share India, said, “62 per cent of Infosys’ revenue comes from North America, 25 per cent from Europe, 10 per cent from rest of the world and India accounted for only 3 per cent. The company reported 20 per cent revenue growth in Q3 FY23. Although EBITDA margins took a beat and fell by 200 basis points (bps) in Q3, but still stable and hovering around 22 to 24 per cent. Infy has a good RoE track record of more than 27 per cent in the last 3 years. Valuations seem reasonable with PE of 24x which is lower than TCS’ of 29x. Inflationary pressure in the US and repeated interest rate hikes by US Fed and EU central banks curbed revenue growth and the stock price has fallen more than 24 per cent in the last one year. With inflationary pressure easing off and a lesser hawkish stance by Fed in the future would rejuvenate demand in North America in FY24-25.”
Jigar S Patel, Senior Manager – Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, “At the current stage, Infy has made a bullish AB=CD pattern with a potential reversal zone of Rs 1,377-1400 levels which are looking lucrative. Thus, we advised to ‘go long’ in this stock at the current market price with an upside target of Rs 1,480 while keeping a stop-loss placed at Rs 1,360 on a daily close basis.”
AR Ramachandran from Tips2trades said, “Infosys has strong resistance at Rs 1,443 on the daily charts. A daily close above this resistance could lead to higher targets of Rs 1,478-1506 in the near term. Support will be at Rs 1,383.”
Meanwhile, Indian equity benchmarks would remain closed today and also on Friday in this holiday-shortened week. The domestic benchmarks would be shut today on account of ‘Mahavir Jayanti’ and on April 7 due to Good Friday. The indices began the first trading day of the new financial year 2023-24 (FY23) on a positive note as they extended their gains for the third straight session. The 30-share benchmark BSE Sensex settled 115 points or 0.19 per cent higher at 59,106 yesterday, while the broader NSE Nifty moved 38 points or 0.22 per cent higher to close at 17,398.
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