Indian tech giant Infosys (NS:) Limited plans to announce fourth quarter fiscal 2024 results and provide fiscal 2025 earnings guidance on April 18, after the market closes. According to a Morgan Stanley report, the announcement will have a significant impact on Infosys shares.
The research firm’s analysis presents three scenarios for Infosys following the announcement. The most likely scenario, given a 60% probability, sees Infosys targeting 3-6% year-on-year revenue growth in constant currency terms and setting an EBIT margin range of 20-22%. This forecast is based on successful transactions in fiscal 2024 and the expected economic recovery in the second half of the year.
In a less optimistic scenario, with a 20% probability, Infosys could forecast revenue growth of just 2-5%. This outlook will reflect ongoing restrictions on discretionary spending and difficulties in generating revenue from completed transactions. On the other hand, with the same 20% chance, the company can expect revenue growth of 4-7%, counting on increased discretionary spending in the second half of fiscal 2025.
These scenarios suggest different impacts on Infosys’ share price. The base case scenario could result in a 4% increase in the share price, consistent with a positive market reaction to the company’s solid performance. A pessimistic forecast could see the share price fall by 3%, while an optimistic scenario could see the share price rise by 11%.
Morgan Stanley has reiterated its Overweight rating on Infosys with a target price of Rs 1,750, indicating 17% upside from its last close of Rs 1,498.05 on March 28.
The firm cites Infosys’ strong execution and innovative services as the basis for its positive stance, but warns of risks including geopolitical tensions, regulatory changes and currency fluctuations that could impact performance.
Infosys reported consolidated net profit of Rs 6,106 crore for the quarter ended December, down 7% from Rs 6,586 crore in the previous year. The company’s revenue from operations in the third quarter increased marginally by 1% to Rs 38,821 crore compared to Rs 38,318 crore in the year-ago quarter.