Infosys Disappoints in Q4, but Brokerages See Limited Downside

Indian IT service major, Infosys, delivered a disappointing set of Q4 results on 13 April. The company reported a 7.8 per cent year-on-year growth in consolidated net profit to ₹6,128 crore, while revenue increased 16 per cent to ₹37,441 crore. However, the Salil Parekh-led company saw a 2.3 per cent drop in revenue and 7 per cent in profit sequentially, raising concerns over its growth outlook.

Infosys’ share price reacted sharply on the New York Stock Exchange (NYSE), declining as much as 10 per cent on Friday. Infosys’ share price on the National Stock Exchange (NSE) also closed more than 3 per cent lower ahead of Q4 numbers.

Brokerages remain upbeat

The Narayana Murthy co-founded company lowered its FY24 constant currency revenue growth guidance to 4-7%, a steep drop from the current 15%. The management also lowered their operating margin expectation to 20-22%, but brokerages remain upbeat.

Better attrition figures coupled with an increasing order book give brokerages confidence that Infosys’ Q4 numbers were merely a result of the weak global environment.

Domestic brokerage ICICI Securities cited Infosys’ high exposure to digital projects as a key contributor to the Q4 numbers. It expects the IT major to struggle in FY24 but maintains Infosys will deliver double-digit revenue growth between 12-13% in FY25 and 26 in constant currency terms.

Infosys Disappoints in Q4, but Brokerages See Limited Downside

However, analysts at ICICI Securities lowered their FY24-26 EBIT (Earnings before Interest and Taxes) forecasts by 11% and EPS (Earnings per share) by 7%. They maintain a ‘Buy’ on the company, with a target price of ₹1,641.

Experts at Motilal Oswal also remain confident of Infosys’ fundamentals and growth outlook. They maintain a ‘Buy’ on the stock with a target price of ₹1,520, while Emkay Global, a Mumbai-based financial services company, set a target of ₹1,620 on Infosys.

Per Tickertape, a stock analysis platform, over 81% of the 42 analysts tracking the IT major maintain a ‘Buy.’ Many see the current drawdown on the stock as an ideal opportunity to add and hold for the long term.

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