On Monday, Infosys shares reached a 52-week low of Rs 1,185.30 on the NSE, as the stock of India's second-largest IT company plummeted by 15% due to disappointing Q4 earnings. The Bengaluru-based company failed to meet Street estimates, reporting only an 8% YoY growth in net profit at Rs 6,128 crore, while revenue from operations increased by 16% to Rs 37,441 crore. These figures for both revenue and profit fell below analysts' expectations.
According to an ET Now poll, the net profit of Infosys was estimated to be approximately Rs 6,550 crore, while the revenue figure was projected to be Rs 38,850 crore.
Infosys' Q4 results were released after market hours on Thursday, and Indian equity markets remained closed for trading on Friday due to Ambedkar Jayanti.
Following the Q4 earnings report, top brokerages have made the following recommendations for Infosys:
Jefferies: Buy | Target: Rs 1,570 | Upside: 13%
Although Jefferies described Infosys' Q4 results for the January-March 2023 quarter as "shocking," the brokerage maintained a 'Buy' rating on the second-largest IT services company with a price target of Rs 1,570. Jefferies stated that the FY24 guidance indicates a weak demand outlook and subsequently lowered its FY24-25 estimates by 3-6%. Despite this, it views the potential stock drop due to the disappointing Q4 results as an appealing buying opportunity.
The brokerage noted that there are several key risks involved with investing in Infosys, including weaker revenue growth, lower margins, unfavourable currency fluctuations, and potential corporate actions.
Nomura: Neutral | Target: Rs 1,290 | Upside: 28%
Nomura, a brokerage firm, has downgraded Infosys to 'Neutral' and set a price target of Rs 1,290, indicating an upside potential of 28%. Nomura stated that the company's guidance and recent deal wins indicate a weak outlook. Furthermore, Nomura has cut its EPS estimates for FY24-25 by 8-9% and lowered its valuation from 21X to 18X. The brokerage also believes that the growth differential between Infosys and Tata Consultancy Services is likely to narrow.
HDFC Securities: Add (from Buy) | Target: Rs 1,470 | Upside: 6%
HDFC Securities has downgraded Infosys from 'Buy' to 'Add' and reduced its target price to Rs 1,470 from Rs 1,830, which indicates an upside potential of 6%. The brokerage has also lowered its estimates for the company by 4-5%. HDFC Securities has revised its target price based on 21X December-24E, down from 25X earlier. The brokerage believes that this valuation is appropriate, given a relative growth discount of 20% compared to TCS' valuations.
Securities: Add (from Buy) | Target: Rs 1,470 | Upside: 6%
