Infosys: Brokerages see up to 19% upside in this tech stock; expect it to lead IT pack on revenue front in Q2

Infosys, India's second largest IT company in terms of revenue, had declared the date for announcing Q2FY23 earnings results on October 13. Infosys is one of the favourite bets among IT stocks for many brokerage houses.  

Recently, two global brokerage houses have put their weight behind Bengaluru-headquartered IT firm. They see up to 19 per cent upside on Tuesday's closing price despite attrition and margin pressure challenges across IT giants. 

Infosys share price target 

Credit Suisses, which gave the most aggressive target among the two brokerages, maintained an Outperform rating for a target price of Rs 1700, an upside of 18.9% on today's closing price. The brokerage had maintained a neutral stance on IT behemoth TCS with a target price of Rs 3275 

Meanwhile, Nomura maintained a buy call on Infosys with a target price of Rs 1610.  

Earlier, JM Financial had picked Infosys over TCS. It said, "We see better risk-reward with Tier I techs vis-à-vis Tier II techs given potential customer specific troubles seeping in for the smaller firms in a weakening demand environment. INFO, HCLT and TECHM are our BUYs amongst the Tier I’s." 

Infosys share price history 

On Tuesday, Infosys shares ended two and half per cent higher to Rs 1429.80 per share on the BSE. The spike in the stock price came after Infosys was expected to lead the IT pack in the quarter 2 earnings. As on October 4, the stock has yielded a negative return of over 14% in the past one year against nearly 22% decline in the Nifty IT index during the same period.  

Infosys Q2FY23 Preview 

As per Nirmal Bang, Infosys was expected to grow revenue by 4.5% QoQ in CC terms and maintain its tag of being the fastest growing Tier-1 player in the industry.   

It expects margin to be at the lower end of the guided range of 21-23% and is likely to expand by 110bps QoQ. 

Brokerage firm ICICI Securities also anticipated Infosys to lead on the revenue front with 5% QoQ CC growth.  

Meanwhile, Nirmal Bang says sequential expansion will be driven by continued increase in utilisation, offshoring, lower visa costs and automation. Strategic investment in talent and competitive compensation revisions are expected to impact margins in the near term. 

"We expect the revenue growth (14-16% in CC terms) and margin guidance (21-23% at the lower end) to be maintained," said both brokerages in their Q2FY23 preview on the IT sector.