Infosys share price jumps on strong Q3 results; analysts bullish, check revised target price

Infosys share price soared on Thursday morning, a day after the Information Technology major reported healthy quarterly results, beating street estimates. The Bengaluru-based IT company not only reported a strong 12% on-year growth in net profit, but it also raised its revenue guidance for the fiscal year to 19.5-20% from 16.5-17.5% earlier. Seeing the strong earnings growth of Infosys, analysts remain bullish on the stock, raising target prices upward for the firm. On Thursday morning, Infosys’ share price was up 1.62%, trading at Rs 1,908 per share.

Jefferies: Buy
Target: Rs 2,200

Infosys earnings were ahead of estimates pinned by analysts at Jefferies. The foreign brokerage firm said that Infosys’ third quarter revenues of $4.2 billion, up 7% from the previous quarter in CC terms on a high base in the second quarter, was the key positive surprise. Analysts highlighted that Infosys’ large deal bookings were up 18% from the previous quarter to sit at $2.5 billion but remained in the $2-2.5 billion range over the past three quarters. “Our price target of Rs 2,200 is based on 33x 12m fwd EPS. Key risks include weaker revenue growth, lower margin, unfavorable currency, and corporate action,” they added.

Kotak Securities: Buy
Fair value: Rs 2,300

Impressed by the strong results posted by Infosys, Kotak Securities has raised revenue estimates by 2-3% baking in strong growth in IT spending and market share gains. The brokerage firm has also raised Infosys’ FY2022-24E EPS. “Infosys is believed to be well-equipped for industry-leading growth in the medium term and will be at the forefront of core transformation deals and managing the digital journey of clients… We raise our FV to Rs 2,300 from Rs 2,000, valuing the stock at 32X FY2024E EPS (30X on September 2023E EPS earlier),” Kotak Securities said.

HDFC Securities: Buy
Target price: Rs 2,200

HDFC Securities has raised Infosys stock target price to Rs 2,200 from Rs 2,100 earlier. HDFC Securities said that growth trajectory remains robust, supported by a strong deal pipeline and wins; broad-based momentum across verticals; operational pivots of offshoring and utilisation mitigating the near-term impact from higher sub-contracting; and uptick in fresher onboarding. The IT major is the Top PIck for HDFC Securities among tier-1 IT stocks. Infosys is valued at 25.3x FY24E by the brokerage firm.

Prabhudas Lilladher: Buy
Target price: Rs 2,234

Apart from Infosys’ massive beat in revenue, the revised revenue guidance has also been noted as a positive. “Infosys won 25 large deals with deal TCV of $2.53 billion, +18% on-quarter with net new deals at 44% well distributed across verticals. Management mentioned that overall pipeline is the largest Infy has had in recent times,” Prabhudas Liladher said in a note. The brokerage firm has increased its EPS estimates by ~1.5%/4.1%/3.1% for FY22/23/24E largely led by increase in revenue estimates given strength in demand. The target price has been increased to Rs 2,234 per share.