The BofA raised the IT services firm to a “buy” from a “neutral,” Infosys’ shares shot up more than 2 percent to Rs 1,509, making it the top Nifty gainer this morning, April 9.
The international brokerage also increased the target price, which indicates an almost 18% increase from present levels to Rs 1,785 from Rs 1,735. They did this by noting favourable valuations.
Thus far this year, Infosys stock has dropped by 2 percent, lagging the Nifty IT index, which has also experienced a slight fall. On February 6, the stock reached a 52-week high of Rs 1,731.
BofA analysts’ optimistic outlook is based on Infosys’ projected demand rebound by 2025. “By the middle of CY24, the post-Covid surge in IT spending can be normalised. After the US elections, there has been an increase in IT spending. We anticipate that future earnings will offer CY24E’s final cut or floor,” they continued.
On April 18, Infosys will disclose its March quarter financial results. Analysts forecast a terrible quarter because there aren’t many big deals, and wage expenses are rising.
“We anticipate that Infosys will post sequentially flat revenue growth in Q4 FY24, with 20 basis points (bps) of cross-currency tailwinds. The limited impact of the significant agreements in Q4 will probably affect the financials. Due to increased visa fees and pay increases, margins are predicted to shrink by 10 basis points to 20.4 percent in Q4, “according to a preview analysis by JM Financial analysts.
One-tenth of a percentage point is equal to one basis point.
The brokerage firm projects that the massive IT company with its headquarters in Bengaluru would guide for constant currency (CC) revenue growth of 3–6% for FY25, which is less than the Street’s 7% projection.
