Infosys share price: Jefferies sees a 17% upside despite the dismal Q4 numbers posted by the company on Thursday, post-market hours. IT sector concerns are already high as trade war and tariff concerns have prompted investors to take a careful approach, considering the influence on customer spending, etc.
Infosys Q4 Results
On Thursday, April 17, the technology leadership of Infosys recorded its consolidated net profit in Q4FY25, having decreased by 11.75 percent YoY to ₹7,033 crore. In the same quarter last year, the company had recorded ₹7,969 crore. Nevertheless, the company’s operating revenue during the quarter under review grew 8% YoY to ₹40,925 crore from ₹37,923 crore during the same quarter last fiscal.
In constant currency terms, Infosys’ revenues increased 4.8 per cent YoY; however, on a sequential basis fell by 3.5 percent.
Revenue miss let down- It was the Revenue sequential fall that caused the letdown. Revenues, at 3.5% sequentially and in constant currency terms, were the major negative surprise, stated Jefferies India Pvt Ltd, who further added that Infosys’ 4QFY25 performance was a letdown. Infosys’ 4.2% YoY constant currency growth in FY25 fell short of its guided range of 4.5%-5.0%.
Q4 topline was affected by more-than-anticipated fall in pass-through revenues (2/3rd of decline) in addition to the normal seasonality, Jefferies added. Infosys saw a sequential top-line decrease in six of its eight verticals
Two reasons Jefferies sees upside
- Margins beat expectations
Even with the effect of wage increases in 4Q, margins fell mere 30 basis points sequentially to 21.0%. While higher employee expenses took a toll on margins, reduced pass-through costs and reduced overheads restricted the margin fall in 4Q. Infosys guided for the range of 20-22% margins in FY26, in line with street expectations. Jefferies has increased their FY26 and FY27 margin guidance by 10- 20 bps to account for margin beat and anticipate margins expanding to 21.5% by FY28.
- Good risk-reward
Jefferies has provided buy ratings for Infosys. Though they reduced their FY26 and 27 EPS estimates by 2-3% to account for the revenue miss that they now see for Infosys to report 9% EPS CAGR between FY26 and 28. Their estimation indicates FY27 EPS can range between Rs 67 to Rs 76. This, according to Jefferies, puts bear case value at Rs1,340 and bull case value of Rs1,980. At the current price, this suggests 5% down & 40% up, which is fantastic risk-reward, stated Jefferies. Jefferies maintains Buy at new price target of Rs1,660 on the basis of 23x Price to earnings.
Credit: Livemint
