ICICI Securities Maintains Buy Recommendation for Infosys, Targets Rs 1300
Infosys' FY27 Organic Growth Guidance Lower Than Expected
Infosys has provided its organic growth guidance for FY27, which is 2.2% year-over-year (YoY) constant currency (CC) at the mid-point. This is lower than the 2.4% organic growth delivered in FY26. Despite strong bookings and a better exit rate compared to last year, the decline in organic growth guidance can be attributed to three main factors: client-specific issues in a large European manufacturing client, a lower onsite revenue mix, and AI-led compression.
The research report highlights that Infosys has executed well in improving realisation in FY26, with deal total contract value (TCV) growth of 28% YoY. However, the company has faced increased competitive intensity due to rapid advancements in AI, which adds to the uncertainty surrounding the quantum of AI-led compression.
Furthermore, Infosys' management has acknowledged the impact of increased uncertainty on the company's growth prospects. This is reflected in the slower addition of headcount and the deferment of wage hikes for FY26.
| FY26 vs FY27 Guidance | FY26 | FY27 Guidance |
|---|---|---|
| Organic Growth (YoY CC) | 2.4% | 2.2% |
| Deal TCV Growth (YoY) | 28% | - |
| Realisation | Improved | - |
Based on the analysis, we maintain a HOLD recommendation for Infosys with a target price (TP) of INR 1,300. This is based on a one-year forward unchanged price-to-earnings (P/E) ratio of 17x on FY28 earnings per share (EPS) of INR 76.6.
Investor Takeaway
Maintain HOLD with a target price of INR 1,300.
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