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Infosys Limited (INFY) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Infosys Limited (INFY)

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Intrinsic Value (DCF)

Current$18.82
→
Intrinsic$25.47
+35%
$17.22$25.47$41.87
Market implies 7% growth for 5 years
DCF analysis suggests INFY could have 35% upside at 14% growth — verify assumptions match your view.
At $19, the market prices in only 7% growth — below historical 14%, suggesting low expectations.
Range: Bear $17 → Bull $42. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →10%12%14%16%
8%$31$34$37$40
10%$22$24$25$28
12%$17$18$19$21
14%$13$14$16$17

Bull Case

  • Bull case ($42) offers 122% upside at 17% growth, 8% discount
  • 26% margin of safety vs. base case estimate
  • Market-implied growth (7%) ≤ historical CAGR (14%)

Bear Case

  • Bear case ($17) implies 8% downside at 11% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$4.68B
Year 2$5.35B
Year 3$6.11B
Year 4$6.99B
Year 5$8.00B
Terminal$126.74B

📐 Model Inputs

Growth Rate14.4%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$4.09BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is INFY stock undervalued or overvalued?
🟢 UNDERVALUED

INFY trades at $18.82 vs. our DCF-derived intrinsic value of $26.23, implying +45% upside. At a 9.5% WACC and 14.4% projected FCF growth, the market appears to be underpricing the present value of INFY's future cash flows. The bear case ($17.84) still suggests upside, providing margin of safety.

What is INFY's intrinsic value?

Using a 5-year DCF model: Base FCF of $4.09B, projected at 14.4% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-1.90B net debt and dividing by 4.15B shares: Bear $17.84 | Base $26.23 | Bull $38.45. Current price $18.82 implies +45% to base case.

How is INFY's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 14.4% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($106.99B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 26.2x.