Infosys Share Price Today: After Daimler deal, stock jumps sharply; experts say poised to rise 5% from current levels

Infosys Share Price Today: The share price of the company made a low of Rs 1170.5 yesterday and a high of Rs 1248 today. It shows Infosys share price has risen sharply by nearly 7% from yesterday’s lows. No doubt that the markets recovered sharply from yesterday’s low too, but still Infosys being one of the leaders in the IT space has shown good strength in the past 2 days indicating that the market was pricing in some deal announcement. Technical Analysts believe that the stock is poised to move further 5% to 7% upside from current levels as it is trading near its 52 week high. 

Goldman Sachs 12 month target price of Rs 1369 implies 11% to 12% potential upside from the current market price vs the sector coverage average of 4%. Their FY22/23E EPS estimates are 6%/5% above Bloomberg consensus estimates on higher revenue as well as margin assumptions.

Key risks:

Macro uncertainty leading to cut in IT budgets in CY21 - Given the uncertainty around the COVID-19 pandemic and the focus of enterprises to cut costs there could be cut in IT budgets or deferral of certain projects which could impact revenue growth for Infosys in FY22.

Increase in Infosys employee attrition - Infosys attrition peaked in 1QFY20 at 20.2% and has since then reduced to an all time low of 7.8% in Q2 of FY21. As demand comes back for IT services and there is demand for talent, attrition could again accelerate, leading to higher hiring and training costs and hence lower margins for Infosys.

INR appreciation vs. USD - India’s IT service companies’ business model is highly sensitive to INR moves vs. the USD. An appreciation in INR vs. USD could negatively impact margins for Infosys and also lower its global competitiveness.

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Pricing pressure due to competition - Legacy IT services (or run/maintenance part of the business) have seen significant pricing pressure over the last five years with the increased adoption of automation and increasing competition. Digital or new gen services, which contributed 47% of INFY’s Q1 FY21 revenues, have higher pricing power as the competition is lower. As digital gets industrialized and competition increases, Infosys could start facing pricing pressure even in that part of its business.