Infosys (NS:) announced strong results for the fourth quarter of FY24 with net profit of INR 7,975 crore, a strong growth of 30% year-on-year. Despite the challenges, the company reported revenue growth of 1.3% YoY to INR 37,923 crore.
However, revenue in constant currency remained flat year-on-year and decreased 2.2% quarter-on-quarter. Looking ahead, Infosys expects stable revenue growth of 1-3% at constant currency in FY25, coupled with operating margins of 20-22%, reflecting confidence in its operating efficiency amid changing market dynamics.
Analysis from Goldman Sachs (NYSE:) suggests Infosys’ fourth-quarter results could mark a turning point, potentially ending negative surprises. The company’s FY25 guidance points to modest growth, supported by higher deal volume and favorable cost outlook. Historically, Infosys has frequently revised its revenue guidance upward throughout the year, and this trend is expected to continue. Despite the recent decline, Infosys’ valuation remains discounted to the sector, which is expected to tighten as discretionary spending recovers.
Goldman Sachs maintains a Buy rating with a 16% upside, highlighting Infosys’s resilience, but cut its 12-month price target by 4% to INR 1,650 ($19.8/ADR). However, they warn of negative valuations for companies like Wipro (NS:) and LTIM, especially those that rely on discretionary earnings. Infosys’ announcement of tight budgets in the telecom sector could also impact companies like TechM, suggesting wider implications for the sector.
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Looking at the true intrinsic value of the stock, InvestingPro’s fair value suggests an upside of 5.8% to INR 1,471. That’s slightly lower than Goldman sees, but the stock’s trajectory appears to be steadily upward due to the valuation gap.
In fact, all analysts covering the topic have given an average upside target of INR 1,649, which is almost exactly in line with Goldman’s target. This analyst section is an important feature that allows retail investors to get an idea of what astute investors on the street think about the counter.
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