INFY - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

🧠 My Thought Process

You're asking for a full-spectrum fundamental analysis of Infosys Ltd (INFY), with a numeric rating and strategic investment guidance. I’ve weighed profitability, capital efficiency, valuation, and business durability, and factored in the recent ₹18,000 Cr buyback announcement, quarterly performance, and institutional sentiment as of September 2025

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📊 Fundamental Analysis of Infosys Ltd

🔍 Core Financials

Profitability

PAT Qtr: ₹6,114 Cr vs ₹6,628 Cr — slight dip, but YoY growth remains healthy.

EPS: ₹62.4 — strong earnings base.

ROE: 30.3%, ROCE: 40.6% — excellent capital efficiency, among the best in the IT sector.

Leverage & Liquidity

Debt-to-equity: 0.04 — virtually debt-free, excellent financial resilience.

Dividend Yield: 2.79% — attractive, with consistent payouts and buyback support.

Cash Flow & Stability

Q1 FY26 revenue: ₹42,279 Cr (↑7.5% YoY); net profit: ₹6,921 Cr (↑8.7% YoY)

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₹18,000 Cr buyback at ₹1,800/share announced on Sept 11, 2025 — 18% premium to market price

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Buyback via tender offer route, with 15% reserved for retail investors

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📉 Valuation Indicators

Metric Value Interpretation

P/E Ratio 24.7 Undervalued vs industry PE of 30.0

P/B Ratio ~7.55 High, but justified by ROE and brand strength

PEG Ratio 3.87 Elevated — growth not fully justifying price

Intrinsic Value ~₹1,580–₹1,620 Slight upside from current price

💻 Business Model & Competitive Edge

Segment Focus: IT services, consulting, cloud, AI, and digital transformation.

Moat: Global delivery model, strong client relationships, and diversified verticals.

Growth Drivers

Buyback signals confidence in cash flows and shareholder value

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Expansion in cloud, AI, and automation.

Strong free cash flow and margin guidance (20–22%)

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📈 Technical & Entry Guidance

Current Price: ₹1,541

DMA 50/200: ₹1,512 / ₹1,604 — trading near short-term support.

RSI: 58.1 — neutral zone.

MACD: 7.35 — bullish momentum.

🎯 Entry Zone

Ideal Buy Range: ₹1,500–₹1,530 — near DMA 50 and below buyback price.

Stop Loss: ₹1,460

Target: ₹1,750–₹1,800 in medium term

🕰️ Long-Term Holding Outlook

Hold if invested: Strong fundamentals, buyback support, and sector leadership justify long-term holding.

Buy on dips: Preferably near ₹1,520 zone.

Growth Triggers: Buyback execution, margin expansion, and AI-led transformation.

⭐ Fundamental Rating

4.4

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