Infosys Q3 Review: Analysts Up Target Price On Revenue Growth, Deal Wins
Shares of Infosys Ltd. rose as analysts hiked price target for the IT company after it raised revenue growth guidance for the ongoing fiscal on large deal wins.
The software services exporter saw its revenue rise sequentially, in line with estimates, in the quarter ended December. Its margin remained steady.
Infosys raised its revenue growth estimate to 19.5-20% for FY22 from 16.5-17.5% projected at the end of the second quarter. It retained its operating profit margin forecast at 22-24%.
The broad-based revenue growth in the third quarter—a seasonally soft period—reflects clients' confidence on the company's capabilities, according to analysts.
The stock gained nearly 2% in intraday trade on Thursday. The stock closed with 1% gains at Rs 1,896.8 piece. Of the 50 analysts tracking the company, 46 maintained 'buy', two maintained 'hold' and two maintained 'sell' recommendations. The overall consensus price of analysts tracked by Bloomberg implied an upside of 15.3%.
Here's what analysts have to say about Infosys' Q3 FY22 results...
Reiterates 'hold', raises target price to Rs 2,020 from Rs 1,890 earlier—an implied return of 9.4%.
The company has delivered a stellar Q3 performance and expects the underlying deal environment to be strong.
Higher number of smaller sized deals implies faster deal to revenue conversion and high near term visibility.
The management's optimism on pricing increases and offshore effort shifts imply continued resilience on the margin front.
The company is well placed to garner price increases as 58% of the business portfolio is now 'digital'.
Reiteratess 'outperform' and hikes target price to Rs 2,350 from Rs 2,250; implied return of 23.79%.
Revenue growth led by full impact of Daimler deal and strong growth in communications and life sciences vertical.
Strong revenue performance in a seasonally weak quarter is very encouraging.
Strong guidance revision points towards robust demand environment.
Increases FY22E/23E/24E EPS by 2%/4%/4.5% to factor in Q3FY22 results and strong guidance revision
Maintains 'buy', raises price target to Rs 2,270 from Rs 2,200; an implied return of 20.33%.
Company has managed its margins well amid high attrition.
Raises FY22-24 estimates by 2-4%.
Expects Infosys to deliver 15% EPS CAGR over FY22-24.
Infosys remains the top sectoral pick.
The company's revenue growth in the December quarter was broad-based, led by manufacturing, life sciences and communications.
Daimler deal led to strong growth in Europe, while India business saw sharp revival.
Digital revenues, up 11% QoQ, remains the key growth driver.
Positively surprised by the company's ability to keep average employee costs stable in Q3 despite high attrition levels.
Maintains 'buy', hikes target price to Rs 2,310 from Rs 2,230—an implied return of 23%.
The strong growth in December quarter will drive further outperformance.
Company increased FY22 dollar revenue growth guidance anticipating strong growth in H2FY22.
Management commentary on moderation of attrition and pricing eases concerns on margin.
Expects the company to improve its EBIT margin by 60 basis points to 24.3% in FY23E.
Marginally raises FY23-24E EPS estimate by 3-4% on stronger-than-expected performance in Q3FY22.
Infosys is well placed to benefit from the acceleration in information technology spends due to its cloud and digital transformation capabilities.
Growth in manufacturing in Q3 as aided by ramp up in Daimler deal.
Infosys is the top pick in IT services space due to its headroom for increased growth potential.
Maintains 'buy', hikes target price to Rs 2,234 from Rs 2,063; an implied return of 17%.
Growth was broad-based led by manufacturing, aided by ramp up of Daimler deal, life sciences and communications.
Digital business has showed sustained growth with the cloud sub-segment growing at a rapid rate.
Large deal wins (25) and distribution of deals across verticals augurs well for broad-based growth.
Overall deal pipeline is the largest that the company has had in the last few years.
Expects cloud native development, data analytics, Internet-of-Things, cybersecurity, modernization and automation (AI & ML) to drive growth.
Resilience in EBIT margins despite supply side pressures is a positive sign.
Attrition will peak out in the next quarter.
There is scope for margin expansion in FY23.
Maintains 'buy', raises target price to Rs 2,160 from Rs 2,100—an implied return of 15%.
Broad-based revenue growth, upward revision in FY22 revenue growth guidance indicates the management's confidence in sustaining growth momentum.
Healthy deal intake and margin resilience aided growth in the December quarter.
Revenue growth in a seasonally soft quarter reflects the confidence of the clients on the company's capabilities.
Supply-side inflation and likely normalisation of discretionary costs remain headwinds to margins, while spike in attrition is a cause for concern.
Maintains 'accumulate', ups target price to Rs 2,090 from Rs 1,840—an implied return of 11.32%.
Wage hike impact was offset by positive operating leverage and pyramid optimisation.
The company's confidence on demand environment and pipeline commentary remains positive factors aiding growth.
Efforts in automation, digital transformation capabilities and competitive pricing are likely to aid Infosys' performance.
Expects Infosys to deliver strong revenue momentum over the next four to five quarters.