With the growth of the constant currency of the FY25 (CC) to 4.2 percent, which follows a very weak FY24 in which the growth of CC income was only 1.4 percent, Infosys is looking back in its weakest yield of two years in almost the last one.
However, this is not the end of the deceleration, with the company by guiding the income growth of the FY26 CC or 0-3 percent, with the upper end of 3 percent based on optimistic management assumptions that will be stable to improve the business environment marginally. That could be a difficult question, given the uncertainties of the war of global tariffs and the probability of recession of the United States in recent weeks.
Even assuming that the company is capable of achieving the mid -range of 1.5 percent, its three -year CC revenue Cag will be 2.3 percent. The growth of CC income is one of the best meters to evaluate the health of the underlying commercial trends for IT service companies.
Taking into account this weakness, the results of the fourth quarter, where the company lost revenues due to consensus and Ebit expectations in 2.83 percent and 1.57 percent, respectively, although disappointing, in reality there is a background.
The question that investors must reflect is what underlies this weakness in growth. There is the possibility that some parts of weakness can be structural, with narrower IT players who gain market share and IA also, interrupting the IT services.
Below nominal GDP
The two-year CC revenue Cag (FY23-25) to 2.8 percent is less than the nominal growth of GDP in the largest market that the company serves the United States, from where 57 percent of its income derives. In general, companies with growth prospects grow at rates well above nominal GDP or an economy. To the extent that the weakness in the performance of Infosys is cyclical, it will recover along with the industry.
But the structural part may require longer solutions. For example, it is worth noting that, even while TCS reported weak results and perspectives, its management pointed out its expectation that it is likely that the Fy26 is better than the FY25. This contrasts with the growth of INFOSYS CC, which is expected to decrease to 1.5 percent in fiscal year 2016 4.2 percent in fiscal year 2015.
Ate Bachelor of Law. briefcase. In our edition dated June 6, 2021, we recreate investors to reserve profits in Infosys. Since then, the stock is flat and significant, significant NIFTY 50 yield, which increases 52 percent in the same period. We have constantly maintained a duration of the view in this period of four years that the action is expensive in relation to the growth prospects and its results/perspectives of the fourth quarter does not help to change that opinion at all.
22 times the rear ep, while its assessment is at the lower end of the range after the recovery of Covid Slump in March 2020, it is not cheap compared to the levels prior to CO-COVID or in an absolute basic given its slow growth.
Posted on April 17, 2025