ICICI Direct is bullish on Infosys has recommended buy rating on the stock with a target price of Rs 805 in its research report dated April 15, 2019.
ICICI Direct’s research report on Infosys
Infosys reported a mixed bag performance with revenues above our expectations and a miss on the margins front. Revenue growth was led by 9.9% QoQ growth in digital revenues (vs. TCS’ 5.9% QoQ) partly offset by a decline in the traditional business (down 1.0% QoQ vs. TCS’ 1.5% growth). Margins declined 113 bps sequentially to 21.4% mainly led by lower utilisation (70 bps), transition cost (40 bps), rupee appreciation (30 bps) and localisation and S&M cost (40 bps). This was partly offset by lower bad debt provisioning (30 bps) and absence of one offs. Valuation & Outlook Digital being a multiyear opportunity and relatively less impacted by macro slowdown, will be key growth driver for Infosys. Further, we believe healthy deal wins will enable the company to narrow the revenue and margin gap with TCS.
Hence, we maintain BUY rating on the stock with a target price of Rs 805 (based on 18x FY21E EPS, which is 15% discount to TCS).