Infosys share price: Infosys shares jump 7% on Q3 results. Is the downgrade cycle over?

Shares of IT major Infosys on Friday rallied up to 6.7% to the day’s high at Rs 1,594 on BSE as it reported decent results after back-to-back disappointments in recent quarters. Investors are betting that Q3 was the bottom for the earnings downgrade cycle for Infosys and the sector as the US macro becomes favourable in CY 2024.

Today’s rally in Infosys shares was the biggest single-day gain in the counter since July 16, 2020.

While reporting a 1% quarter-on-quarter (QoQ) revenue decline in constant currency terms, Infosys has tightened its revenue growth guidance band to 1.5-2% in cc terms (vs 1.0-2.5% earlier), which implies -1% to 0% QoQ cc growth for Q4.

EBIT margin of 20.5% declined 70bp QoQ, but it was 30bp above estimates as the impact of the wage hike was lower than expected at 70 bps.

Also Read | Infosys Q3 Results: Profit falls 7% YoY to Rs 6,106 crore; company revises FY24 revenue guidance

Here’s what analysts said after Infosys Q3 results:

Nomura

We tweak our FY24-26F EPS by

Motilal Oswal

We have kept our FY24-FY26 EPS estimates broadly unchanged after the 3QFY24 result. We view Infosys as a beneficiary of acceleration in IT spending, given its capabilities in Cloud and Digital transformation areas. We value the stock at 22x FY26E EPS and reiterate our BUY rating. Target price: Rs 1,750.

Also Read | TCS shares jump over 3% as Q3 earnings beat Street estimates. Should you buy?

Nuvama

We upgrade FY24/25/26 estimates by -0.3%/+1.3%/+2.2%. We continue to value Infosys at 24x FY26 PE. Maintain ‘BUY’ with a target price of Rs 1,850 versus Rs 1,800 earlier.

Emkay Global

We expect growth to accelerate in FY25 on account of the ramp-up of large deals, strong deal pipeline and expected recovery in discretionary spending. We tweak FY24-26 EPS estimates by under 1%, factoring in Q3 performance. We retain BUY with an unchanged target price of Rs 1,850 at 25x its Dec-25E EPS.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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