Infosys share price: Expert says buy for a target of Rs 1710

Ashis Biswas, Head of Technical Research, CapitalVia Global Research says that technically, with the breakout above Rs 1400 level on Infosys, the stock is set to gain momentum. Research suggests the stock is set to maintain its medium-term uptrend going forward. Ashish said the stock should be bought with stop-loss of Rs 1304 and target of Rs 1710.
 
Ashis foresees a flat to negative sequential profit growth. On a 2% - 4% (QoQ) increase in revenue, Growth in dollar revenues, and constant currency (CC) terms is expected to be in the 3% - 5% range sequentially.

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Ashis Biswas expects that the size of the Infosys buyback could be between Rs 10,000-12,000 cr, and at a price of Rs 1650- Rs 1670 apiece.
 
Ashis says that Infosys is expanding its lead over the competition in handling clients' cloud journeys and assisting in big deal wins. Infosys enjoys a differentiator in cloud migration roadmaps and managing data, processes, and applications in the cloud. IT services can gain value from promoting seamless integrations while retaining hybrid cloud models after the cloud migration process is completed. Connected systems on the cloud will produce massive amounts of data, and data analytics and AI-driven automation will be the following big growth engines.
 
Ashis says the cloud, cyber security market, and data analytics drive Infosys' digital portfolio to rise at a 30% annual pace in FY21. Digital revenue now accounts for half of total revenue, and it will continue to expand rapidly at the cost of core legacy revenue. Ashis expects the digital business will expand and generate higher margins than the company's average of 24%.
 
Sharekhan recently interacted with Infosys’ management to understand the demand environment, traction for its Cloud offering, pricing strategies for digital offering, deal pipeline, and margin outlook. Sharekhan retains Buy rating on Infosys with a price target to Rs 1650

Sharekhan says that Infosys Management highlighted that its strategic investment priorities are in areas such as:

1)     Cloud
2)     Data
3)     Experience
4)     Cyber security

Sharekhan highlighted that Infosys Management indicated that FY2022E growth would be driven by:

1)     higher spending on Cloud-related technologies by clients (to tap opportunities it launched Infosys Cobalt in August 2020)
2)      strong demand for cyber security, data analytics and enhancement of customer experience
3)     rising demand for core transformation
4)     continued strong deal wins ($12 billion in YTD FY2021 versus $9 billion in FY2020)
5)     higher pricing for certain new-age technologies (which negates pricing pressure in the legacy business)
6)     stronger deal pipeline even after a large deal wins over the last couple of quarters.