Analyst Corner: Double-digit revenue growth seen for Infosys in FY22 & beyond

The deals keep on flowing. Infosys has announced a mega-deal with Daimler that involves IT infrastructure transformation. Daimler’s IT infra team in Germany, wider Europe, US and APAC region will transition to Infosys. Infosys has not announced size and tenure though basis the size of Daimler and scope, the deal will be fairly substantial in nature. Infosys is on track to report double-digit revenue growth in FY2022 and beyond. Even after the run-up, the stock offers reasonable upside. Buy.

Infosys has announced an IT infrastructure transformation deal with Daimler. Infosys will absorb Daimler’s employees across various geographies including Germany, rest of Europe, US and APAC region. The deal is subject to regulatory approvals. Infosys will transform IT operating model and infrastructure landscape across workplace services, service desk, data center, networks and SAP basis together for Daimler. Infosys’ deliverables include—smart hybrid cloud with focus on accelerating the multi-cloud journey with focus on open source adoption, creation of Zero Trust network, standardised technology stack by bringing in an ecosystem of best of breed partners and persona-driven and cognitive, AI powered anytime-anywhere workplace solution.

Infosys has not disclosed deal size or duration. The deal will be included in 3QFY21 TCV numbers. Unauthenticated media reports have pegged the deal at US$1.3 bn in size in November. Infrastructure management has not been an area of strength for Infosys. Deal wins validate the investments made in capabilities, assets, solutions and partnerships for building strong cloud practice. Daimler deal dynamics are not clear from the press release though it is reasonable to assume lower upfront margins noting the rebadging of employees in high-cost geographies with skill sets that do not appear to be differentiated.