Shares of IT major Infosys tumbled 4% to an intraday low of Rs 1,890 on the BSE after revenue forecasts missed analysts' expectations, suggesting that a broad-based IT recovery has yet to take hold.
However, the company reported a 5% year-on-year (YoY) growth in net profit and revenues while raising its FY25 guidance to 3.75-4%.
The company reported revenue growth of 3.1% quarter-on-quarter (QoQ) in constant currency, in line with analysts' estimates. The EBIT margin remained flat at 21.1%, reflecting a marginal decline of 0.1% YoY.
The growth during the quarter was broad-based, with strong momentum in financial services. The total contract value (TCV) for large deals stood at $2.4 billion, down 41% QoQ.
The company added a net of 2,456 employees after seven quarters.
After the Q2 results, here is what brokerages say:
Nomura: Buy | Target price: Rs 2,130
Nomura reiterated its buy rating on Infosys with a target price of Rs 2,130. The firm expects Infosys to deliver USD revenue growth of 4.6-7.8% year-on-year in FY25-26F.
They believe the stock is one of the best ways to capitalize on a potential improvement in discretionary demand for IT services. Double-digit growth in the small deal pipeline in Q2 serves as an early indicator. Infosys is Nomura’s top pick in the large-cap Indian IT services space.
Bernstein: Outperform | Target price: Rs 2,270
Bernstein maintained an Outperform rating on Infosys, while hiking the target price to Rs 2,270 from Rs 2,100
The "Up-cycle" in Q2 continues and Infosys remains Bernstein’s top pick. The deal momentum was also healthy and the company maintained its leadership growing ahead of peers.
Motilal Oswal: Buy | Target price: Rs 2,200
Motilal Oswal retained its buy rating on the stock with a target price of Rs 2,200. The brokerage firm has marginally adjusted its estimates for FY25, FY26, and FY27E due to slightly slower revenue growth expectations in the near term. Nonetheless, Infosys has maintained its margin guidance of 20-22%, which is viewed as encouraging. Motilal Oswal expects Infosys to be a key beneficiary of the acceleration in IT spending in the medium term.
Nuvama: Buy | Target price: Rs 2,250
Nuvama retained its buy call on the stock with a target price of Rs 2,250.
Infosys delivered broad-based growth with early signs of a revival in discretionary spending. While revenue growth was decent, margins and total contract value (TCV) left much to be desired. Nuvama has cut its FY25E and FY26E EPS estimates by 4.5% and 1.9%, respectively, mainly due to higher taxes in FY25.
Investec: Sell | Target price: Rs 1,700
Investec maintained its sell rating on Infosys but cut the target price to Rs 1,700 from Rs 1,720. Infosys delivered the best H1 FY25 performance among peers, driven by a strong deal backlog and relatively lower revenue headwinds.
However, Investec noted that it sees no real catalysts for the stock's performance going into H2. The EBIT margin lacks meaningful tailwinds in H2 FY25, and the commentary still indicates muted discretionary spending, though there are some green shoots. Deal wins in Q2 FY25 were also weak.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
However, the company reported a 5% year-on-year (YoY) growth in net profit and revenues while raising its FY25 guidance to 3.75-4%.
The company reported revenue growth of 3.1% quarter-on-quarter (QoQ) in constant currency, in line with analysts' estimates. The EBIT margin remained flat at 21.1%, reflecting a marginal decline of 0.1% YoY.
The growth during the quarter was broad-based, with strong momentum in financial services. The total contract value (TCV) for large deals stood at $2.4 billion, down 41% QoQ.
The company added a net of 2,456 employees after seven quarters.
After the Q2 results, here is what brokerages say:
Nomura: Buy | Target price: Rs 2,130
Nomura reiterated its buy rating on Infosys with a target price of Rs 2,130. The firm expects Infosys to deliver USD revenue growth of 4.6-7.8% year-on-year in FY25-26F.
They believe the stock is one of the best ways to capitalize on a potential improvement in discretionary demand for IT services. Double-digit growth in the small deal pipeline in Q2 serves as an early indicator. Infosys is Nomura’s top pick in the large-cap Indian IT services space.
Bernstein: Outperform | Target price: Rs 2,270
Bernstein maintained an Outperform rating on Infosys, while hiking the target price to Rs 2,270 from Rs 2,100
The "Up-cycle" in Q2 continues and Infosys remains Bernstein’s top pick. The deal momentum was also healthy and the company maintained its leadership growing ahead of peers.
Motilal Oswal: Buy | Target price: Rs 2,200
Motilal Oswal retained its buy rating on the stock with a target price of Rs 2,200. The brokerage firm has marginally adjusted its estimates for FY25, FY26, and FY27E due to slightly slower revenue growth expectations in the near term. Nonetheless, Infosys has maintained its margin guidance of 20-22%, which is viewed as encouraging. Motilal Oswal expects Infosys to be a key beneficiary of the acceleration in IT spending in the medium term.
Nuvama: Buy | Target price: Rs 2,250
Nuvama retained its buy call on the stock with a target price of Rs 2,250.
Infosys delivered broad-based growth with early signs of a revival in discretionary spending. While revenue growth was decent, margins and total contract value (TCV) left much to be desired. Nuvama has cut its FY25E and FY26E EPS estimates by 4.5% and 1.9%, respectively, mainly due to higher taxes in FY25.
Investec: Sell | Target price: Rs 1,700
Investec maintained its sell rating on Infosys but cut the target price to Rs 1,700 from Rs 1,720. Infosys delivered the best H1 FY25 performance among peers, driven by a strong deal backlog and relatively lower revenue headwinds.
However, Investec noted that it sees no real catalysts for the stock's performance going into H2. The EBIT margin lacks meaningful tailwinds in H2 FY25, and the commentary still indicates muted discretionary spending, though there are some green shoots. Deal wins in Q2 FY25 were also weak.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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