Infosys Q3 Results Review - Discretionary Spend To Witness Improvement: IDBI Capital

IDBI Capital Report

Infosys Ltd.'s Q3 FY24 numbers were broadly in line with consensus. The company has maintained large deal wins of $3.2 billion, with 71% being net new.

Infosys is also confident of garnering deal renewals in the medium term. It has upgraded the lower end of the guidance to 1.5% from 1% indicating marginal improvement in demand. We expect Infosys to be at the top end of the guidance of 2% YoY in FY24E.

In addition, we believe that the company could see strong growth across geographies over the medium term (led by improving discretionary spend & ramp up of mega deals).

Hence, we have revised our FY25E earnings per share estimates upwards by 1.4%. We now introduced FY26E in our estimate.

We upgrade the stock from 'Hold' to 'Buy' and revise multiple upwards to 22 times (on FY26E EPS) from 21 times leading to target of Rs 1,730 (versus Rs 1440).

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