MUMBAI: CLSA has maintained its 'buy' rating on Infosys with a target price of Rs 1,230.
The brokerage said Infosys is its top pick for 2018 due to reasonable earnings growth and re-rating potential.
"Infosys has been able to maintain growth rates similar to peers despite significantly higher internal sources of distraction over the last year which reiterates the quality of its client relationships. The choice of CEO suggests management attrition is unlikely," said CLSA. A stable management team can limit the gap with peers even as the business turns around from self-help over 2018, it added.
With a demand environment supportive of its business mix, CLSA believes Infosys' valuation gap with peers should close.
"Infosys trades at the largest discount to nearest peers, Accenture, TCS, Cognizant and Wipro, in a decade. With a promising CEO, lack of significant growth gap and potential for more active capital allocation, this appears overdone. We see Infosys returning to peer levels of growth with lower distractions (from leadership, immigration or taxes) and gunning for stronger glory post-CY18," said CLSA.
Shares of Infosys ended down 0.32 per cent at Rs 1,012.10 on Friday.
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