Infosys Q2 Results - Centrum Maintains 'Add' Rating On The Stock, Revises Target Price; Here's Why

Centrum Broking Report

Infosys Ltd. reported robust performance for the quarter. Both revenue and Ebit margin were inline with estimates. Reported revenue of Rs 409.8 billion, up 4.3% QoQ in INR terms, up 2.5% QoQ in USD terms.

Segment-wise, in cc terms, financial services grew by 2.3% YoY, energy and utilities grew by 10.9% YoY, manufacturing grew by 12.3% YoY and communication grew by 7% YoY.

While, retail was soft, down 9.6% YoY. Ebit margin was flat QoQ at 21.1%. Large deal TCV of $2.4 billion versus $4.1 billion in Q1 FY25. Headcount grew by 2,456 employees QoQ to 317,788 employees.

Attrition increased by 20 bps QoQ to 12.9%. Utilization increased by 60 bps QoQ to 85.9%. Added (gross) 86 clients during the quarter versus 87 in Q1 FY25. Increased its FY25 revenue growth guidance to 3.75%-4.5% in cc terms with Ebit margin of 20%-22%.

It is seeing signs of improvement in the demand environment in the BFSI space. However, the discretionary tech spending remain muted.

We expect revenue/Ebitda/profit after tax to grow at 11.5%/14.1%/12.6% over FY24-FY27E. We have revised our FY25E/FY26E/FY27E EPS by 0.2%/1.5%/NA.

We roll over to Sep’26E for valuation and maintain Add Rating on the stock with revised target price of Rs 2,122 (versus Rs 1,864 earlier) at PE of 25 times on FY26E.

We have increased target PE multiple from 24 times to 25 times to account for increased guidance for FY25E and certain green shoots in demand environment.

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