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Next 6-12 months:

Global economic slowdown: A recession in key markets (US, Europe) could reduce IT spending. Best case scenario revenue can grow 10% YoY max, given forecast recently of 4% growth.

Rising employee costs will squeeze margins along with competition from other IT services companies (Accenture, TCS, Wipro). Adapting to new technologies (AI, cloud, automation) and client demand for them will be impactful for cashflow.

5-year outlook:

Continued shift towards cloud, AI, and automation will drive demand. US political and economic stability will be low impact for Infosys but there is risk, so discount rate is increased.

Infosys is a well-established global IT services provider with diverse solutions across various industries, and access to a vast talent pool.

Growing demand for digital services, cloud adotpion and AI offers significant growth potential, playing against other factors squeezing margins.

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Disclaimer

The user Chester holds no position in NYSE:INFY. Simply Wall St has no position in any of the companies mentioned. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Limited revenue and margin growth inside increasingly risky global market conditions

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