Is Infosys A Strong Buy In 2023?

Is Infosys A Strong Buy In 2023?

When it comes to defining the Indian economy, the tech sector can be safely referred to as the poster child of the show. Since their inception in the country, the progress that the entire sector has witnessed is mind-boggling, and that has positively affected things like TCS and Infosys share price, and these companies are on a constant growth trajectory. 

But here’s the thing. Now two time periods are the same when it comes to the share market, and when one period may prove to be profitable, the next one may bring about turbulent times. 

The Indian IT sector is the cornerstone of the Indian economy, and the role that they play is immense. Not only are they one of the largest contributors to the country’s overall GDP, but major employers as well. 

As investors, IT stocks have always been a darling, and the consistent returns that they have generated are commendable. For someone who opened an online demat account before 2020, something like TCS, Tech Mahindra, or Infosys could’ve proved to be a great buy, but the year just around the corner is 2023, and can Infosys perform similarly well? Well, that is a question that we will be discussing here. 

The History. 

It was in Pune that Infosys was founded by N.R. Narayana Murthy, Nandan Nilekani, S. Gopalakrishnan, S.D. Shibulal, K. Dinesh, N.S. Raghavan, and Ashok Arora in 1981. Infosys operates in the country’s vast information technology space and provides consultancy and outsourcing services. Infosys is headquartered in Bangalore and became the fourth Indian company to attain a market cap of 100 billion dollars. 

The company is the second biggest in this space after TCS and is placed at the 602nd position when it comes to the largest companies in the world, according to Forbes. 

Infosys is listed on the NSE and BSE, as well as on the NYSE, and the company maintains a significant presence overseas as well. They possess an office in Milwaukee, USA, which is a post that was created to better cater to the needs of motorcycle major, Harley Davidson. 

But what does all of this mean from an investment point of view? Well, a lot and a large number of investors advocate buying Infosys shares in 2023. Let us take a look. 

  • The company has reported a consistent rise in earnings for quite some years now, and the reported revenue of the company stood at a staggering 1,21,641 Cr INR in 2022, which is a significant rise over the company’s earnings in 2021. In fact, Infosys is one of those few companies that reported positive income growth during the dreadful pandemic year of 2020. 
  • From the profitability aspect as well, the Infosys share price can be safely expected to rise, as the profits that they have been consistently reporting, have risen significantly over the past years as well. 
  • The net worth can play a major role in Infosys share price, and that has witnessed considerable raises as well, with the company reporting a net worth of 75,350 Cr. INR, a figure that is always on a steady growth trajectory. 
  • The company possesses a wide and varied workforce of talented and skilled individuals who can act as the wind in the sails of the company. In fact, Infosys is one of the largest employers in the country as well.
  • A fact that new investors must watch out for is that the shares of large and popular companies like Infosys are seldom available for a rock-bottom P/E since the demand that they witness on a daily basis is significant. In the case of Infosys, the P/E stands at 27.58. 
  • The company’s debt levels are significantly low as well, and the debt-to-equity ratio lies at 0.08. Investing in such companies is always a good idea. 
  • One of the best aspects of Infosys is the fact that they deliver dividend payouts at regular intervals as well. 

The aforementioned are some of the factors that make Infosys a lucrative IT sector buy for 2023, but there are a few things that you need to know about before you have Infosys shares in your online demat account in 2023. 

You see, the world is slowly but gradually coming out of the pandemic, and several major economies around the world have been severely affected due to this turmoil as well. Indian IT companies are greatly reliant on the US for a chunk of their businesses, and it is common knowledge that the US economy is going through a rough patch. With inflation soaring, the US government is greatly relying on basis point hikes, and this can potentially have a ripple effect that negatively affects IT stocks. The war in Ukraine doesn’t help much either, so these are a couple of aspects that one must watch out for if they are planning on picking up Infosys shortly, or in 2023. 

Final Take:

Infosys remains an extremely lucrative company to invest in, and the depreciation of the rupee against the US dollar has significantly boosted the company’s margins. The Infosys share price has shown consistent gains over the last years and can be assumed to follow that path in the future as well, but one needs to keep an eye out for the aforementioned international factors.