Infosys Q2 results: Credit Suisse, Macquarie among 7 brokerages see up to 30% upside

Infosys Ltd, which marginally outperformed the Nifty50 so far in the year 2021, but analysts at top global brokerage firms are of the view that the rally could well extend and take the IT major above the Rs 2000-levels in the next 1 year.

Almost 5 out of 7 global brokerages firms collated by Zee Business Research Team see Infosys surpassing the Rs 2000-levels.

Credit Suisse sees Infosys to head towards Rs 2,250 that translates into an upside of over 30 percent from Rs 1708 recorded on 13 October.

Infosys’ Q2FY22 revenues rose 6.3 percent QoQ CC and 19.4 percent YoY CC to USD 3,998mn, led by the growth in verticals such as communications, manufacturing, Hi-Tech, and Life sciences.

The FY22E revenue guidance was increased to 16.5-17.5% CC (14-16% earlier). Management commentary was positive on-demand environment and hiring buoyancy is expected to continue beyond FY22E.

“Strong sequential growth (ex-Daimler), broad-based (by verticals) large deal wins, scope expansion in large client accounts and upside growth risk with mega deal closures (currently in the pipeline) are key positives,” Elara Capital said in a report.

The brokerage firm has a buy rating on Infosys with a target price of Rs 2000 that translates into an upside of about 17 percent from current levels of Rs 1708.

We have collated a list of recommendations from top global brokerages on Infosys post September quarter results:

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Credit Suisse: Overweight| Target raised to Rs 2250 from Rs 1890

Credit Suisse maintains an overweight rating on Credit Suisse post September quarter results and raised the 12-month target price to Rs 2250 from Rs 1890 earlier.

Macquarie: Outperform| Target Rs 2190

Macquarie maintains an outperform rating with a target price of Rs 2190.
Key positive surprise according to the global investment bank was a stronger-than-expected EBIT margin.  

A revenue guidance upgrade for FY22 underscores the company’s participation in strong industry demand trends. It marginally raised FY22E EPS by 1%.  

Morgan Stanley: Overweight| Target Rs 1920

Morgan Stanley maintains an overweight rating on Infosys post September quarter results with a target price of Rs 1920.

The 2Q performance was strong on both revenue, and margins, but see softer large deal wins and rising attrition rates, plus margin headwinds in 2H, as key negatives.

Morgan Stanley expects Street EPS estimates to be unchanged.

CLSA: Buy| Target: Rs 2060

CLSA maintains a buy rating on Infosys post Q2 results with a target of Rs 2060.
While results were not perfect – a 2nd successive quarter of renewal heavy order booking is a dampener.

They should sustain investor confidence in earnings growth momentum strength & help Infosys bridge valuation gap vs TCS.

CITI: Buy| Target Rs 1930

Citi maintains a buy rating on Infosys with a target of Rs 1930. The Revenue /margin came in ahead of expectations.
 
Deal TCV was weak, and attrition spiked up sharply. Deal TCV needs to be monitored going ahead.

JP Morgan: Overweight| Target Rs 2200

JP Morgan maintains an overweight rating on Infosys with a target of Rs 2200. Infosys remains the top pick in the sector according to JP Morgan.

 The revenue guidance was raised again, and the supply pressures were managed.

UBS: Neutral| Target Rs 1820

UBS maintains a neutral rating on UBS with a target price of Rs 1820. Margin remained a key positive in Q2, but TCV remains a concern. The IT major delivered a strong margin beat despite attrition spike and wage hikes.

GS: Buy| Target Rs 2149

Goldman Sachs maintains a buy rating on Infosys with a target price of Rs 2149. The earnings were above expectation on margin and strong execution. The IT major continues to be fastest growing large cap IT company in our coverage.

Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.