Infosys shares under pressure after India's 2nd largest IT firm trims FY24 revenue guidance; here's what brokerages say

Infosys share price target 2023, Infosys share price NSE, Infosys Q2 results 2023: Infosys (INFY) shares declined on Friday after the country's second-largest IT company staged an overall better-than-estimated quarterly performance but cut the upper-end of its annual revenue forecast despite a strong order win. The No. 2 software services in the country reported a consolidated net profit of Rs 6,212 crore for the second quarter of the current financial year, translating into an increase of 4.5 per cent compared with the previous three months. Infosys reports consolidated revenue of Rs 38,994 crore for the second quarter of the current financial year, in line with analysts’ estimates.

The counter declined as much as Rs 65.5 or 4.5 per cent to touch the day's low of Rs 1,400 from the previous close of Rs 1,465.5 on NSE in opening deals. The counter ended at Rs 1,432.85, down Rs 32.65 or 2.23 per cent on NSE. 

Here's how the counter moved on Friday, October 13: 

Source: NSE

However, the IT major trimmed its guidance for revenue growth to 1-2.5 per cent for the full financial year 2023-24 in constant currency terms, from 1-3.5 per cent three months ago. The Bengaluru-based company maintained its operating margin guidance for the current financial year at 20-22 per cent. Infosys's alternative dispute resolution (ADR) declined by 6.5 per cent for the counter.

Attrition at IT major eased to 14.6 per cent from 17.3 per cent in Q1 in Q2 FY24, having eased from 17.3 per cent in the previous quarter and 27.1 per cent in Q2 FY23. Mentioning the record large deals in an uncertain macro environment, Salil Parekh, CEO and MD, Infosys said, “We had our highest large deals value at $7.7 billion in Q2 spread across all verticals and geographies. This, in an uncertain macro-environment, is a testament to our ability to pivot and stay relevant to the evolving client needs, by delivering the benefits of transformation as well as productivity and cost savings at scale."

“Strong H1 performance with significant large deal wins, builds a solid foundation for the future. The growing adoption of our Generative AI offering, Topaz, is helping us deliver consistent value and expand market share," he added.

Infosys dividend

Besides, Infosys also announced a dividend of Rs 18 per equity share of face value of Rs 5 each for its shareholders along with its financial results. 

Infosys dividend record date 2023, Infosys dividend payout date 2023

The Bengaluru-based company has fixed October 25 as the record date for the interim dividend and November 6 as the payout date.

Infosys share price target 2023: Buy, sell or hold Infosys shares after the IT major's Q2 results? Here is what analysts make of Infosys shares

Morgan Stanley has maintained an overweight call on Infosys but has cut the target to Rs 1,600 from Rs 1,640. Well positioned for strong EBIT growth in F25, led by improved revenue growth & margin improvement. In the near term expect P/E multiples to come down given a cut in revenue guidance and cautious commentary, the global brokerage added in its note.

Jefferies has maintained a buy stance on the IT major and has raised the target price to Rs 1,650 from Rs 1,550. Jefferies said that the 2Q growth and margins beat estimates and net new order book of $3.7 billion was impressive, yet management cut FY24 growth guidance by 100bps citing a slowdown in discretionary spending & delays in project starts. Cut estimates for FY24 by 1.5 per cent.

Nomura maintained a neutral call but has cut the target to Rs 1,400 from Rs 1,410. Revenue guidance cut for FY24F overshadows strong execution in 2Q, the brokerage said in its note.
Lowering of guidance reflects pull-back in discretionary demand & slow decision-making, the note further said.

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