Motilal Oswal Gives A Buy Rating To This IT major For Potential Gain Of 35%

Renowned brokerage firm Motilal Oswal Financial Services has given a buy rating to Infosys Limited for a target price of Rs 2000 in its latest report. Infosys Limited is a leading multinational information technology company offering business consulting, information technology, and outsourcing services. It was founded in Pune and currently headquartered in Bangalore.

Stock Overview of Infosys

Today stock of IT major opened at Rs1505.15 share apiece and touched the day's high of 1514.00. The Current Market Price (CMP) of Infosys is 1478.90 after losing 1.67% today. The brokerage firm has given a target price of Rs 2000 for Infosys. Considering the CMP and TP of the stock, investors can get a potential gain of 35% if they buy the stock now. The 52-week high of Infosys was registered at 1953.70 while the 52-week low remained at 1362.20. The stock climbed to its 52-week high on 17th January, 2022 while it hit the 52-week low on 2nd June, 2021.

Multiple levers on both revenue growth and profitability

According to the report of Motilal Oswal, Infosys sees no slowdown despite a weak macro. The management of the company does not foresee any slowdown in demand despite weakness in the macro environment. Digital transformation projects hold key to its business success. The IT major has a renewed focus on Europe. The management of Infosys expects incremental spends in Europe to remain as robust as the US amid rising acceptance of outsourcing. Infosys has also figured out specific geographies within Europe with a strong growth potential. The managements is expected to look for M&A (merger and acquisition) opportunities to grow in Europe. The company is involved in communication with clients to enhance pricing and seeing strong traction there. It desires better pricing in current and new deals.

Strategy Focus

Infosys has shared five key elements to look for going ahead. It seeks to scale its Cloud business as it has outstanding partnership with SaaS players and hyperscallers. It seeks to build continued intensity in Digital as the management plans to expand on the Digital front with opportunities around Data Analytics and AI, Cybersecurity, experience, etc. It also strives to focus on next-generation business. Infosys aspires to continue its next generation seeding, building partnership with digital native companies. It will emphasize on advanced automation with next generation BPM, latest ADM, and using AI and ML. Finally, Infosys also wants to focus on employee and talent. It will focus on employee engagement, offering a predictable career path, and reskilling the employees to attract new talent and retain existing one.

Valuation

According to Motilal Oswal, "Though growth in 4QFY22 was muted, demand remains intact and its order book strong. The management's FY23 growth guidance and high headcount addition provide further visibility on demand. We expect INFO to deliver margin on the higher side of its guidance band, with strong growth and reduced dependence on sub-contractors as attrition falls. We expect the company to be a key beneficiary of an acceleration in IT spends. Based on our revised estimates, the stock is currently trading at 21x FY24E EPS. We value the stock at 28x FY24E EPS, implying a TP of INR2,000."

5. About Infosys

About Infosys: It came into existence in 1981. It is an NYSE listed global consulting and IT services company. Infosys has amassed more than 4-decades of experience in managing the systems and workings of global enterprises. The company directly steer its clients through their digital journey. It does it by enabling the enterprise with an AI-powered core. Infosys has built 13 subsidiaries all over the globe. Its market capitalization is Rs 622,091 crore.

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decisions.