Infosys Falls 4% As Q2 Earnings Slightly Misses Street Estimates; Buy, Sell Or Hold?

Infosys Share Price: Shares of IT giant Infosys slipped as much as 4 per cent in opening trade on October 18, a day after the company delivered a slight miss in its Q2 earnings.

The company reported a consolidated net profit of Rs 6,506 crore for Q2FY25, reflecting a 2.2 per cent sequential increase. Revenue from operations grew 4.2 per cent quarter-on-quarter to Rs 40,986 crore, slightly missing the forecast of Rs 40,857 crore.

Among the positives include the fact that its constant currency revenue growth of 3.1 per cent was well ahead of peers like TCS (1.1 per cent) and HCLTech (1.6 per cent).

The company also raised its revenue growth guidance for financial year 2025 to 3.75 per cent to 4.5 per cent from the earlier guidance which ranged between 3 per cent to 4 per cent.

However, brokerages like Kotak and Citi had expected the guidance range to be between 4 per cent to 5 per cent in constant currency terms.

What Should Investors Do Now?

Brokerage firm Nomura is bullish on the stock. The brokerage has a “buy” rating on the stock with a price target of Rs 2,130.

Nomura said that while the Project Maximus impact continues to play out on margins, Infosys remains its top pick in the sector.

Nomura said that while the Project Maximus impact continues to play out on margins, Infosys remains its top pick in the sector.

Brokerage firm Morgan Stanley had forecasted the possibility of a bit of stock correction for Infosys in the near term, largely due to its earnings miss. However, the brokerage also advised investors to build fresh positions during such a potential correction.

On the technical level, Morgan Stanley sees strong support coming in for the stock at its five-year average free-cash-flow multiple–which sits at Rs 1,780.

Much like Morgan Stanley’s expectations, Infosys shares reached a day’s low of Rs 1,889 shortly after the market opened, but the fall was quickly absorbed as buyers stepped in. Likewise, the stock came sharply off its lows, and at 09.24 am, it was trading at Rs 1,936.85 on the NSE.

Citi though, has a “neutral” rating on the stock with a price target of Rs 1,960.

Out of the 45 analysts covering Infosys, 31 have a “buy” rating, nine say “hold,” and five recommend a “sell.”

Shares of Infosys are currently trading 3.1 per cent lower at Rs 1,906. Its US-listed shares, or the ADR, had ended 1 per cent lower overnight. The stock is still up 23 per cent so far in 2024.