Infosys Q3 Results Review - Revenue Ahead Of Expectations; Strong Large-Deal Traction: ICICI Securities

ICICI Securities Report

Infosys Ltd.'s revenue growth was better than consensus estimates and margin was in-line with our/consensus estimates. Management commentary around demand environment remains unchanged with continued pressure in discretionary spending.

Infosys reported healthy deal total contract value of $2.3 billion with 71% net new TCV. Strong net new TCV, up ~68% YoY on trailing twelve months-basis, provides comfort to our 9% YoY constant currency organic revenue growth assumption for FY25.

We expect Infosys to benefit the most from a recovery in discretionary spends as and when client spending improves.

We value Infosys at 22 times (earlier 21 times) on Q5-Q8 earnings per share of Rs 77 to arrive at a revised target price of Rs 1,688, implying ~13% potential upside. Upgrade to 'Add'.

Key risk: Slower-than-anticipated recovery in discretionary IT spends.

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