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Infosys (INFY)
NYSE:INFY
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Infosys
(NYSE:INFY)
Rating:81Outperform
Price Target:
$21.50
▲( 19.18% Upside)
Positive Factors
Digital Growth
Digital projects at Infosys have shown robust growth driven by cloud services.
Large Deals
INFY had a large deal total contract value (TCV) of USD2.6bn.
Negative Factors
Demand Environment
Infosys echoed the sentiment that the demand environment has weakened and decision making has been impacted with customers becoming incrementally cautious.
Economic Environment
A potential weakening of the US economy poses a risk for Infosys, as the company is heavily reliant on the US market for its IT services revenue.
Revenue Guidance
INFY issued FY26F revenue guidance of 0-3%, ~7% below consensus.
Infosys (INFY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$75.74B
Dividend Yield2.3%
Average Volume (3M)11.99M
Price to Earnings (P/E)23.9
Beta (1Y)0.77
Revenue Growth3.85%
EPS Growth-0.38%
CountryUS
Employees300,000
SectorTechnology
Sector Strength75
IndustryInformation Technology Services
Share Statistics
EPS (TTM)0.20
Shares Outstanding4,153,895,000
10 Day Avg. Volume9,889,063
30 Day Avg. Volume11,986,143
Financial Highlights & Ratios
PEG Ratio-6.05
Price to Book (P/B)6.46
Price to Sales (P/S)0.00
P/FCF Ratio17.46
Enterprise Value/Market Cap0.93
Enterprise Value/Revenue0.93
Enterprise Value/Gross Profit11.96
Enterprise Value/Ebitda3.81
Forecast
1Y Price Target
$19.26Price Target Upside6.76% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
Infosys Business Overview & Revenue Model
Company DescriptionInfosys Limited, together with its subsidiaries, provides consulting, technology, outsourcing, and next-generation digital services in North America, Europe, India, and internationally. It provides digital marketing and digital workplace, digital commerce, digital experience and interactions, metaverse, data analytics and AI, applied AI, generative AI, sustainability, blockchain, engineering, Internet of Things, enterprise agile DevOps, application modernization, cloud, digital process automation, digital supply chain, Microsoft business application and cloud business, service experience transformation, energy transition, cyber security, and quality engineering solutions; Oracle, SAP, and Saleforce solutions; API economy and microservices; and Topaz, an AI-first set of services, solutions, and platforms using generative AI technologies. The company's products and platforms include Finacle, a core banking solution; Edge suite of products; Panaya platform, Infosys Equinox, Infosys Helix, Infosys Applied AI, Infosys Cortex, and Stater digital platforms; and Infosys McCamish, an insurance platform. It serves aerospace and defense, agriculture, automotive, chemical manufacturing, communication, consumer packaged goods, education, engineering procurement and construction, healthcare, high technology, industrial manufacturing, information services and publishing, insurance, life science, logistics and distribution, media, entertainment, mining, oil and gas, private equity, professional, public, retail, travel, hospitality, utilities, and waste management industries. The company was formerly known as Infosys Technologies Limited and changed its name to Infosys Limited in June 2011. Infosys Limited was incorporated in 1981 and is headquartered in Bengaluru, India.
How the Company Makes MoneyInfosys generates revenue primarily through its IT services and consulting offerings. The company's revenue model is driven by providing end-to-end business solutions, which include systems integration, enterprise application services, cloud services, and digital transformation projects. Key revenue streams include long-term contracts with clients for application development and maintenance, as well as consulting services. Infosys also earns from business process management services, which optimize and automate clients' business processes. The company has significant partnerships with major technology firms like Microsoft, Oracle, and SAP, which enhance its service offerings and contribute to its earnings. Additionally, Infosys invests in innovation through its Infosys Innovation Fund and partnerships with startups, which help bolster its technological capabilities and market reach.
Infosys Financial Statement Overview
Summary
Infosys presents a strong financial profile with consistent revenue growth, high profitability margins, and robust cash flow generation. The company maintains a healthy balance sheet with low leverage and strong equity financing. While profitability slightly dipped in the most recent year, the overall financial health remains solid. Infosys' effective cash management ensures liquidity and the ability to fund growth initiatives. Continued vigilance on cost structures and liabilities will be essential to sustain this positive trajectory.Income Statement
Infosys has demonstrated consistent revenue growth over the years, with a notable increase from $13.56B in 2021 to $19.28B in 2025. The gross profit margin is healthy at approximately 26.34% in 2025, indicating efficient cost management. The net profit margin remains strong at 16.39% in 2025, reflecting robust profitability. EBIT and EBITDA margins are also impressive at 21.48% and 26.28% respectively, underscoring operational efficiency. However, a slight decline in gross profit and net income compared to 2024 suggests a need for careful monitoring of cost structures.88
Very Positive
Balance Sheet
Infosys maintains a solid balance sheet with a low debt-to-equity ratio of 0.09 in 2025, indicating prudent leverage management. The equity ratio is strong at 64.37%, highlighting substantial equity financing. Return on equity (ROE) is stable at 28.19%, showcasing effective utilization of shareholder funds to generate profits. The company's strong cash position further enhances financial stability. However, the slight increase in total liabilities from 2024 to 2025 warrants attention.85
Very Positive
Cash Flow
Infosys exhibits impressive cash flow management, with a significant growth in free cash flow from $2.88B in 2024 to $4.20B in 2025, marking a 45.66% increase. The operating cash flow to net income ratio is strong at 1.41, indicating efficient cash generation relative to net income. The free cash flow to net income ratio is equally robust at 1.33, underscoring the company's ability to generate substantial free cash flow. These metrics reflect Infosys' strong cash flow management and liquidity position.92
Very Positive
| Breakdown | ||||
| Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 19.28B | 18.56B | 18.21B | 16.31B | 13.56B | Gross Profit |
| 5.08B | 5.47B | 5.50B | 5.32B | 4.73B | EBIT |
| 4.14B | 3.83B | 3.83B | 3.75B | 3.33B | EBITDA |
| 5.07B | 4.21B | 4.71B | 4.12B | 4.05B | Net Income Common Stockholders |
| 3.16B | 3.17B | 2.98B | 2.96B | 2.61B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 4.67B | 3.43B | 2.32B | 3.23B | 3.70B | Total Assets |
| 17.42B | 16.52B | 15.31B | 15.55B | 14.82B | Total Debt |
| 962.53M | 1.00B | 1.01B | 722.00M | 627.00M | Net Debt |
| -2.24B | -771.00M | -471.00M | -1.58B | -2.75B | Total Liabilities |
| 6.17B | 5.92B | 6.09B | 5.56B | 4.32B | Stockholders Equity |
| 11.21B | 10.56B | 9.17B | 9.94B | 10.44B |
| Cash Flow | Free Cash Flow | |||
| 4.20B | 2.88B | 2.53B | 3.06B | 2.97B | Operating Cash Flow |
| 4.46B | 3.15B | 2.85B | 3.35B | 3.26B | Investing Cash Flow |
| -471.46M | -708.00M | -218.00M | -1.00B | -1.13B | Financing Cash Flow |
| -2.86B | -2.12B | -3.29B | -3.33B | -1.32B |
Infosys Technical Analysis
Negative
18.04
Price Trends
17.77
Positive
19.57
Negative
20.93
Negative
Market Momentum
0.14
Negative
52.42
Neutral
33.90
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For INFY, the sentiment is Negative. The current price of 18.04 is above the 20-day moving average (MA) of 17.98, above the 50-day MA of 17.77, and below the 200-day MA of 20.93, indicating a neutral trend. The MACD of 0.14 indicates Negative momentum. The RSI at 52.42 is Neutral, neither overbought nor oversold. The STOCH value of 33.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for INFY.
Infosys Risk Analysis
Infosys disclosed 58 risk factors in its most recent earnings report. Infosys reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
Inability to execute contracts and / or amendments with clients on a timely basis can impact our revenue & profit, causing fluctuations in our reported results. Q1, 2022
Infosys Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $75.74B | 23.91 | 29.00% | 2.30% | 3.85% | -0.38% | |
77 Outperform | $198.11B | 26.11 | 27.26% | 1.80% | 4.10% | 9.78% | |
76 Outperform | $39.39B | 16.82 | 16.61% | 1.51% | 4.09% | 14.05% | |
71 Outperform | $41.16B | 49.01 | 5.25% | 1.87% | -9.12% | ― | |
68 Neutral | $248.10B | 45.92 | 21.91% | 2.58% | 1.23% | -33.87% | |
67 Neutral | $29.95B | 19.18 | 16.91% | 2.12% | -2.83% | 106.18% | |
61 Neutral | $11.41B | 10.19 | -7.05% | 2.95% | 7.46% | -10.52% |
* Technology Sector Average
Performance Comparison
INFY
Infosys
18.11
1.22
7.22%
ACN
Accenture
309.58
13.85
4.68%
CTSH
Cognizant
79.12
11.82
17.56%
FIS
Fidelity National Info
78.22
1.89
2.48%
IBM
International Business Machines
258.63
92.76
55.92%
WIT
Wipro
2.86
0.18
6.72%
Infosys Earnings Call Summary
Earnings Call Date:Apr 17, 2025
(Q4-2025)
| % Change Since: 8.81%|
Next Earnings Date:Jul 17, 2025
Earnings Call Sentiment Neutral
Infosys demonstrated strong performance in FY '25 with significant growth in revenue, operating margins, and free cash flow. However, the sequential revenue decline and cautious guidance for FY '26 reflect uncertainties in the economic environment, particularly regarding tariffs and client spending on discretionary and third-party costs.Q4-2025 Updates
Positive Updates
Revenue and Growth
Infosys reported a growth of 4.2% in constant currency terms for FY '25, with revenues reaching $19.3 billion. Notably, Europe grew three times the company rate at 15% in constant currency terms.
Operating Margin Improvement
Operating margin improved by 50 basis points over FY '24 to 21.1%, despite multiple headwinds.
Large Deal Wins
The company closed 96 deals with a total contract value (TCV) of $11.6 billion, 56% of which were net new deals.
Free Cash Flow Achievement
Infosys generated a record $4.1 billion in free cash flow, representing 129% of net profit.
AI and Strategic Expansion
Infosys is seeing growing demand for AI-driven transformation projects and has expanded through acquisitions in energy consulting and cybersecurity.
Negative Updates
Sequential Revenue Decline
Revenue declined by 3.5% sequentially in constant currency terms, primarily due to a reduction in third-party costs and seasonal weakness.
Uncertain Future Guidance
Guidance for FY '26 is 0% to 3% growth in constant currency terms, reflecting uncertainty in the economic environment and potential reductions in third-party revenues.
Mixed Sector Performance
While some sectors like Financial Services and Manufacturing grew in double digits, others like Retail and Communications faced challenges due to economic uncertainty and discretionary spending pressures.
Company Guidance
In the Q4 FY '25 earnings call, Infosys reported a 4.2% revenue growth in constant currency terms for the fiscal year, with an operating margin of 21.1%. The company generated $4.1 billion in free cash flow and secured $11.6 billion in large deals. For Q4, the year-on-year growth was 4.8%, with an operating margin of 21%. Looking forward, Infosys has issued a growth guidance of 0% to 3% in constant currency terms for FY '26, citing an uncertain environment. The operating margin guidance for FY '26 is set at 20% to 22%. The company highlighted strong demand for AI projects and strategic expansions through acquisitions in energy consulting and cybersecurity. Additionally, Infosys has been managing costs and improving margins through Project Maximus, which focuses on value-based selling, lean and automation, and portfolio improvements.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.