Shillong, April 18: Following a selloff in the previous session, Infosys share price made some progress in their recovery on Tuesday.
But given that the stock has fallen more than 24% from its 52-week high, investors are left wondering what will happen to the IT stock in the wake of disappointing March quarter results and FY24.
Last week, Infosys’ quarterly earnings caught everyone in the market off guard, even mutual funds that had pre-purchased Infosys shares in March for Rs 2,576 crore.
If Kotak Institutional Equities is to be believed, the IT giant will likely report a subdued June quarter, with growth picking up in the second half of FY24, driven by mega deal revenue. It forewarned that a significant revenue shortfall and the outlook for growth and margins moderating could have an immediate impact on the stock price.
Despite this, the brokerage believed Infosys was among the companies better positioned in the present business climate due to its ability in tackling both measures to reduce costs and discretionary spending.
“We think that the cost takeout and vendor consolidation exercises will result in a net gain for the company. To account for the difficulties and poor execution, we reduced our goal multiple to 20 times from 22 times, resulting in a revised Fair Value of Rs 1,470 from Rs 1,700 before”, the statement said.
Tuesday’s trading saw the stock trading nearly unchanged at Rs 1,259.45. Compared to its 52-week high of Rs 1,672.45 the stock is down 24%. Following the release of its March quarter results, a number of brokerages lowered their price expectations on the company, which is presently trading between Rs 1,200 and Rs 1,675 as opposed to earlier levels of up to Rs 1,800.
Infosys vs TCS
Ravi Singhal, CEO of GCL Broking, favoured Infosys over TCS and stated, “Looking at Infosys’ guidance after weak quarterly results, TCS shares look slightly less attractive than Infosys shares. Those with a one- to two-year time horizon can purchase Infosys in the area of Rs 1200 to Rs 1250 per share while setting their stop loss at Rs 1100 per share levels. In the following two years, it’s anticipated that Infosys’ share price would increase to levels of Rs 1860 per share”.