Motilal Oswal

This brokerage firm sees a significant upside in the stock of near 29 per cent from current levels with a price target of Rs 1,200 on the stock from the current levels.

The firm sees broad-based growth going forward and uptick in large deal TCV in traditional business. It also sees an uptick in discretionary spending. However, it also observers blips around. "Although Infosys has been seeing an active transformation with its ‘Renew and New' strategy, its recovery has taken a pause because of unexpected blips through the year," the firm has said.

Caution

The firm has also cautioned against any sharp upmoves in the near term. "While the guidance implies a gradual pick-up in momentum, lower deal wins in FY17 (USD3.4b; -10% YoY) and multiple pockets of issues restrict confidence around immediate broad-based recovery, which would be a necessary trigger for valuations. The stock trades at 14.4/13.1x FY18/19 earnings. Our FY17-19 CC revenue/USD revenue/EPS CAGR stands at 8.4/8.2/6.3%. Our target price of Rs 1,200 (17x FY19 earnings) implies 29% upside," the firm has said.

ICICI Direct

The brokerage firm is bullish on the stock of Infosys and has now recommended a buy rating on the stock with a price target of Rs 1,060. The firm believes that the company's decision to return part of the cash and recast capital allocation policy that are steps in the right direction towards shareholder value creation.

Furthermore, the management remained optimistic about adoption of new offerings Skava, Mana, Panaya and Edge across verticals and cited that revenues from these offerings grew at 42% YoY in FY17.

Attractive valuations

ICICI Direct believes that though Infosys surprised negatively on the EBIT margin guidance front, the current market price is already priced in.

"Currently, it is trading at attractive valuation of 13.2x FY19 EPS & offers FY19 FCF yield of 5%. Secondly, Infosys intends to return part of the cash and recast capital allocation policy that are steps in the right direction towards shareholder value creation.

Hence, we maintain our BUY recommendation on the stock. We also roll over to FY19E and revise our target price to Rs 1,060," the firm said in its research report.

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