Buzz Update Infy ​​ADR declined 9% after Q4 results TOU

Buzz Update Infy ​​ADR declined 9% after Q4 results


Infy ​​ADR declined 9% after Q4 results

Infosys (Infy ADR)’s American depository receipts have fallen 9.34 percent in the past two days after the company announced its fourth-quarter results, which it ‘muted’ during post-market hours on Wednesday. Infy ​​ADR crashed from $ 22.57 to $ 20.46 on Nasdaq, while Infosys Q4 reported a weak, partially (both revenue & margin) impact on client-linked terms.

However, analysts are bullish on Infosys and advise investors to add stock to every decline. However, most of them reduced their FY23-24 EPS estimates by 3-4 percent.

Low profit expectations

“We think Infosys is in a relatively good position; the revenue guidance facility provides flexibility, a 400bp consumer cushion created in the last 6 months and a one-time reverse,” said Citi, a foreign brokerage firm. “We have reduced our FY23-24 EPS expectations by 3-4 per cent and reduced our target to multiplex 32x (from 33x) as it provided greater smoothness than expected in the margins. Our new TP is 0 2,010. We suggest, “he added.

According to Morgan Stanley, street EPS expectations will fall due to weaker Q4 performance and negative surprise than expected in FY2023 margin guidance. “We will be constructive on the pace of growth and see corrections as buying opportunities.”

TCS vs Infy

Another foreign brokerage, Jefferies, said: “We have cut our FY23-24 expectations by 3-6 per cent and expect Infosys to offer a 14 per cent EPS CAGR over FY22-24.

Infosys trades 28x 1-year fwd PE – Despite a 10 per cent discount to TCS and a 2 per cent higher revenue growth outlook, Jefferies said: Surpassed TCS by 10 per cent in months.

Domestic brokerage Prabhudas Lilladhar downgraded the stock from ‘Buy’ to ‘Accumulate’ with a revised price target of ₹ 1,899 (₹ 2,204) in the near 100-lead, reducing EPS expectations by 10.6% / 8.2% in FY23/24. A 130bps reduction in EBIT margins, lower than the expected exit revenue growth rate, and an increase in the risk-free rate to 7.2 percent (previously: 6.8 percent).

Motilal Oswal cut our FY23 / FY24 EPS estimate by 5% due to slow growth and margin pressure. “Depending on its capabilities around the cloud and digital transformation, we see Infosys as the main beneficiary of the acceleration in IT costs,” it added.


April 15, 2022

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