In a recent series of investor meetings in the US, Infosys’ CFO and Financial Controller shared optimistic updates on the company’s progress and future outlook. According to BofA, Infosys (NS:INFY) is tracking well for the first quarter of FY24, thanks to the ramp-up of several major deals initiated in March.
Despite recent underwhelming performances from other software and digital firms, Infosys management believes their cautious assumptions regarding discretionary spending will shield them from additional pressures. However, the broader demand environment remains conservative, with a focus on cost-reduction projects.
Infosys is establishing itself as a leader in AI and generative AI services, earning top rankings from seven industry analysts. It is one of the first IT services companies globally to receive certification for its AI management systems, which promote responsible AI practices and regulatory compliance.
These credentials are expected to position Infosys as a significant player in the expanding AI services market. Interestingly, Infosys has not observed a decline in deal prices due to anticipated AI-driven productivity gains, and vendor pricing aggression remains low despite wage inflation and foreign exchange trends.
BofA has set a price objective (PO) for Infosys at INR 1,785 (ADR: US$21.5), based on a target price-to-earnings (P/E) ratio of 25x for the 12 months ending March 2026. This target is about 10% lower than the sector leader’s multiple, aligning with the average trading discount over the past three years. Compared to its historical performance, this target multiple represents a 10% premium over Infosys’ five-year average forward P/E multiple.
