Reverse DCF

Infosys: what the price is assuming

A normal DCF asks you to guess growth. Run backwards, it takes today's price and solves for the growth the market has already priced in — then you can judge whether this company can deliver it.

What the price assumes

Attractive

To justify its price of ₹1038, this stock must grow earnings at -2% every year for 5 years. Our analysis caps realistic growth at ~3%. At that growth it is worth ₹1333 — upside of 28%.

Growth the price implies
-1.8% a year
for 5 years, fading to 5%
It has actually compounded at
Not enough history
The gap
-0.0 pp
28% downside if it only repeats history
Price today ₹1,037.7 Value at the reference growth ₹1,333.17
Why this baseline, and what it is built on

Infosys has a generally good promise track record with more achieved/new promises than missed/ghosted. Management provides clear revenue growth guidance of 1.5% to 3.5% for FY27 in constant currency. While recent TTM sales growth has slowed to around 3.16%, the conservative estimate of 3.0% for g1 aligns with the higher end of this guidance, reflecting a cautious but trusting approach to management's forward view. The company maintains very low leverage, supporting a reasonable discount rate of 10%. A 5-year stage-1 growth period is appropriate for a large, established IT services firm, with a 3-year fade to a 5% terminal growth rate.

Through 2026-03-31

Your assumptions

Change any of these and the value moves. A valuation that flips on a one-point change in the required return is telling you something.

Value on these assumptions

₹1,332.35

Against today's price

+28%

8 projected years, then a terminal value at 5.0%.

Normalized net profit is discounted as a proxy for owner earnings, not full free cash flow. An analytical tool, not investment advice.

How to read this valuation

  1. Start from the price, not the forecast. A normal DCF asks you to guess growth and hands back a fair value. Run backwards, it takes today's price and solves for the earnings growth the market is already assuming.
  2. Compare that with what the company has done. The historical profit and EPS CAGR sit beside the implied number. A price that needs 25% a year from a business that has compounded at 10% is asking a lot, and the gap is the risk you are taking on.
  3. Then apply your own view. Change the growth rate, how long it lasts, how it fades and the return you require. A valuation that flips on a one-point change in the discount rate is telling you something about itself.
  4. Mind the caveats. Normalized net profit stands in for owner earnings, not full free cash flow; terminal growth is capped at 6%, roughly nominal GDP; cyclicals are flagged because a peak-earnings base overstates value. This is an analytical tool, not investment advice.