Brokerages Optimistic On Infosys’ New Strategy But Say Execution Key
While Infosys Ltd.’s new three-year roadmap to boost its business is in line with the changing dynamics of the industry, what will matter most is execution, analysts said.
In a detailed presentation to analysts, Parekh said the country’s second-largest software services provider is betting on growth with strategic investments and “will invest in inorganic moves to expand client relevance.”
The Bengaluru-based software giant plans to change user experience by digitising its core systems and has parked $100 million to execute its plans. It will use the capital to build capabilities for executing strategy and cited it as one of the reasons behind the cut in margin forecast.
Here's what brokerages had to say post Infosys' concall:
- Maintained 'Buy' with a target price of Rs 1,340, implying a potential upside of 12.8 percent from the last regular trade.
- Expect a greater focus on digital services versus products and on execution.
- We have built in 7.5-9 percent constant currency growth through the financial years till March 2021 and 23.5-23.8 percent earnings before interest tax margin implying an acceleration in revenue and earnings growth.
- Key Risks: Weaker revenue growth, lower margin and unfavourable currency.
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- Maintained ‘Neutral’ with a target price of Rs 1,100, implying a potential downside of 7.4 percent form the last regular trade.
- New strategy well-articulated, but similar to peers; execution would be the key.
- Management indicated intention to make sales and marketing more robust.
- No new clarity on new margin guidance.
- Investments cited by the company are valid for Infosys.
- Maintained ‘Buy’ with a target price of Rs 1,330, implying a potential upside of 11.9 percent from the last regular trade.
- Granular strategy articulated around digital, core business, sales and talent.
- Company cited that the current financial year will be a year of stabilization.
- Next financial year to be a year of momentum building and the financial year-ending March 2021 will be a year of acceleration.
- Expect current financial year to be a better year for BFS than the previous financial year.
- Multi-pronged investments in sales to focus on digital, large deals and new accounts.