GuruFocus’ latest valuation models present conflicting views on Infosys, highlighting the complexities and uncertainties in assessing the Indian IT giant’s true worth amid divergent earnings and cash flow estimates.
Infosys is drawing a mixed verdict from valuation models, with GuruFocus’ latest discounted cash flow analysis putting the Indian IT services group below its market price on an earnings basis but above it on a cash-flow basis. In the earnings model, the site estimates an intrinsic value of $10.07 a share, compared with a quoted price of $12.60, implying the stock is about 25.1% too expensive. Yet the free cash flow version points to a value of $16.22, which would leave the shares modestly undervalued.
The split result reflects how heavily DCF work depends on assumptions. GuruFocus said its earnings model assumes 10% annual growth for a decade, a terminal growth rate of 4% and a discount rate of 11%, derived from the 10-year Treasury rate plus a premium. It also noted that it strips out non-recurring items from earnings, arguing that share prices tend to track profits more closely than free cash flow.
Still, the broader valuation picture is not one-sided. GuruFocus gives Infosys a GF Value of $19.26, which points to a larger discount, while its GF Score of 87 out of 100 suggests strong underlying quality in the inputs. The company’s financial strength and profitability both score highly, although momentum is weaker. GuruFocus also assigned Infosys a predictability rank of 3 out of 5 stars, which it says makes the DCF output only moderately reliable.
That caution matters because other recent valuation work has reached different conclusions. VCP Scanner estimated a per-share value of $15.54 and said the stock traded at roughly a 40% discount, while StockCalc’s model placed intrinsic value at ₹1,534.3 a share, or 18.2% above its quoted Indian-market price. GuruFocus also said insider activity has leaned negative, with $6.6m of selling over the past three months and more investors trimming than adding to positions, though two gurus still hold the stock. For investors, the message is less that Infosys is definitively cheap or expensive than that its valuation depends sharply on which earnings path and discount rate is used.
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