INFY - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 4.2

📊 Core Financials

• Revenue & Profit: Quarterly PAT rose from ₹6,114 Cr. to ₹7,718 Cr. (13.3% growth).
• Margins: Strong ROE (30.3%) and ROCE (40.6%) highlight excellent profitability and capital efficiency.
• Debt: Debt-to-equity ratio at 0.04 shows negligible leverage.
• Cash Flows: Dividend yield of 2.64% reflects consistent shareholder returns.

💹 Valuation Indicators

• P/E Ratio: 25.4 vs Industry PE of 26.4 → fairly valued.
• P/B Ratio: Current Price ₹1,640 / Book Value ₹223 ≈ 7.35 (premium valuation).
• PEG Ratio: 3.98 → expensive relative to earnings growth.
• Intrinsic Value: Fairly valued, supported by strong EPS (₹64.7) and robust fundamentals.

🏢 Business Model & Competitive Advantage

• Infosys is a global IT services leader, offering consulting, outsourcing, and digital transformation solutions.
• Strong brand recognition and diversified client base across industries and geographies.
• Competitive advantage lies in scale, innovation, and consistent delivery of high-margin services.

📈 Entry Zone & Long-Term Guidance

• Entry Zone: Attractive accumulation between ₹1,500–₹1,600.
• Long-Term Holding: Strong fundamentals, global presence, and dividend yield make Infosys a reliable long-term compounder.

✅ Positive

• Strong ROE (30.3%) and ROCE (40.6%).
• Quarterly profit growth of 13.3%.
• Dividend yield of 2.64% provides steady income.
• DII holdings increased (+2.11%).

⚠️ Limitation

• High P/B ratio (7.35) indicates premium valuation.
• PEG ratio (3.98) suggests expensive valuation relative to growth.
• FII holdings declined (-2.34%).

📉 Company Negative News

• Decline in FII holdings.
• Premium valuation may limit near-term upside.

📈 Company Positive News

• Quarterly profits improved significantly.
• DII holdings increased, showing domestic institutional support.
• Technical indicators (RSI 65.8, MACD positive) show strong momentum.

🏭 Industry

• Industry PE at 26.4 suggests Infosys trades in line with peers.
• IT services sector benefits from digital transformation, cloud adoption, and AI-driven demand.
• Peers face intense competition, but Infosys maintains strong global positioning.

🔎 Conclusion

Infosys is a fundamentally strong, debt-free IT services giant with excellent ROE and ROCE.

Despite premium valuations on P/B and PEG ratios, its global presence, strong profitability, and dividend yield make it attractive for long-term investors.

Accumulation near ₹1,500–₹1,600 is recommended for those seeking stable growth and exposure to India’s IT sector.