Should you buy Infosys?: IT giant Infosys’s shares are trading approximately 35% down from their all-time highs, that too when there is an all-around boom in the markets.

In the next 5 minutes, I’ll tell you the reasons for weakness in Infosys’s share price, 360-degree fundamental and technical outlook, analyst views and retail sentiment on Stocktwits.

About Infosys:

In 1981, in Pune, Maharashtra, 7 engineers dreamt of building India’s leading software service company. 40 years later, that dream evolved into Infosys.

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Infosys is India’s 2nd largest IT services company with $17 billion in annual review and over 3 lakh employees in 50+ countries. 

Analysis:

Infosys has seen a lot of volatility over the years, but the last 1 year has been quite difficult for the company and its shareholders. Due to events in the previous year, Infosys stock is trading -35% from its all-time high.

Here are the 3 reasons behind this fall:

1. Overall slowdown in the IT industry. Like other IT companies, the majority of revenue for Infosys comes from North America and the EU region. However, due to the recession concerns, the business in these regions seems to be slowing down in the last few quarters.

2. The matter has become even more difficult after the bankruptcy of America’s Silicon Valley Bank and Signature Bank. Given this crisis, World’s largest IT services company, Accenture, has also cut its FY24 growth guidance which is a big negative.

Fundamentals:

Infosys is a fundamentally strong company. In the last 3 years, sales have increased by 13% CAGR, and Net Profit has seen an increase of +7%. 

Return on Equity is around 30%, and investors have been rewarded through dividends and buybacks. But at a price-to-earnings (P/E) ratio of 22x, the stock is a bit expensive, according to experts.

Technicals:

Infosys stock price has come down to December 2020 levels after bad 4th quarter results. In the last few weeks, we have seen a decent recovery in its stock price, and it’s currently trading around its 200-day moving average on weekly charts. But the overall trend is still downward.

Key Positives:

Well, it is impossible to predict precisely when the global factors will improve, but experts expect improvement by 2024. In the next two years, analysts expect the company’s topline to grow by 19% and profit by 25%.

Further, with a slowdown in start-up funding and widespread layoffs, employee costs could reduce significantly, which will help margins improve going forward.

Analyst Ratings:

Most brokerages have a “neutral” to slightly positive rating on Infosys and see an upside of just ~10% from current prices.

While knowing all the above is essential, knowing what retail investors think about the stock is the step in your stock research journey. You need to see what investors, traders and SEBI RAs say about Infosys on Stocktwits.

Now, let’s view our Stocktwits scorecard. As we’ve mentioned earlier, Infosys is a fundamentally strong company, but given the global uncertainty, weak technical and muted analyst ratings, Infosys gets 3 out of 4 thumbs down.

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