Infosys share price hits 52-week low, stock down 27% in 2022 – should you buy?

Infosys share price touched a new 52-week low of Rs 1,360.05 and 1360 per share on the BSE and NSE, respectively, after crashing 1 per cent intraday in today's session. Infosys share price has dropped over 27 per cent so far in 2022 amid a mute outlook. 

Infosys share price had last touched a 52-week low of Rs 1,367.20 on June 17, 2022. 

After the US Fed announced another 75 basis points rate hike along with hawkish commentary, the US markets closed over 1.5 per cent lower, mainly dragged by IT stocks on Wednesday. Tracking the same, Indian IT stocks were also weak in the early morning, however, recovered as the day progressed. 

The Nifty IT index, one of the top losers among sectoral indices, was down 0.50 per cent at 26,710.

IT index P/E multiples are down 30% YTD, with earnings cut of ~5%, while the P/E de-rating was led by macro risk on growth (FY24E), earnings cuts were driven by margin cuts as lead-lag between growth and operating structure normalise, HDFC Securities said. 

The brokerage reckons that margins have bottomed in the first quarter, with medium-term tailwinds of normalisation in attrition/sub-con, utilization, and pricing. It maintains a constructive stance on the sector with Infosys being the preferred pick from tier-1 and Persistent Systems from mid-tier IT. 

Similarly, Axis Securities believe Infosys is well-placed for encouraging growth from a long-term perspective given its multiple long-term contracts with the world’s leading brands.  

Though the company’s margins are likely to be under pressure in the short term primarily due to rising subcontracting costs, richer revenue visibility gives us confidence in its business growth going forward, the domestic brokerage added. 

Axis Securities recommend a Buy rating on the stock and assign a 24x P/E multiple to its FY24E earnings of Rs 73.4/share to arrive at a target price of Rs 1750 apiece, a 29 per cent upside.