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Informist, Friday, Apr. 24, 2026

 

MUMBAI – Despite soft March quarter results and an underwhelming revenue guidance, brokerages expect Infosys Ltd.'s growth to recover on artificial intelligence related services and new order wins. Most of the brokerages have maintained their 'buy' call on the stock post March-quarter results.

 

The information technology giant reported a consolidated net profit of INR 85.01 billion for the March quarter, up 27.8% sequentially, which was above analysts' estimate of INR 75.56 billion. The company's revenue rose 2% to INR 464.02 billion, slightly missing the Street's view of INR 465.79 billion. In constant currency terms, the revenue fell 1.3%, sharply lower than the Street's view of a decline of 0.1-1.0%.

 

The management has given operating a margin guidance of 20-22% for 2026-27 (Apr-Mar). The company expects its revenue to grow 1.5-3.5%.

 

The company's Jan-Mar revenue declined due to seasonality and slower decision-making during the month of March, Emkay Global Financial Services said. The company's revenue growth guidance was below the brokerage's estimate. The guidance includes 25 basis points contribution from Stratus, while excluding the Versent and Optimum Healthcare acquisitions, according to Emkay. The company's guidance also factors in a 0.81% drag from reduced spending by a large European manufacturing client along with a 50 basis points impact from offshore shift, Emkay said.

 

AI-related engagements are typically priced at a premium, reflecting the higher cost of specialised talent, Emkay said. However, this is partly offset by the need to share productivity gains with the clients, the brokerage added. "The company is also witnessing strong momentum in AI services," Emkay said. Growth in new service offerings and an expansion in deal scope will largely offset productivity-led compression in traditional IT services, it said.  

 

Emkay has trimmed Infosys' earnings per share estimate over FY27-FY28 by 0.5-1.0% factoring in March quarter results and guidance. The brokerage has maintained a 'buy' recommendation on the stock with a target price of INR 1,450.

 

"While Infosys's guidance was below expectations (2% to 5%), we note that it is not too far off from the Street's estimates of FY27 growth," Nuvama Institutional Equities said. The brokerage expects the company's growth to recover as macroeconomic concerns ease and generative AI reach inflection point. Post the recent correction, strong deal-wins, and bottom cycle valuations, the Infosys stock appears attractive at current levels, Nuvama said. It has maintained a 'buy' call on the stock with an unchanged target price of INR 1,650. Nuvama has raised its FY27 earnings per share view by 3% and for FY28 by 1% as it expects lower revenue growth to be offset by higher dollar and rupee assumptions.

 

Infosys' revenue growth guidance for FY27 assumes acceleration in banking, financial services, and insurance and Europe verticals, Nirmal Bang Institutional Equities said. The brokerage is of the view that the first half of FY27 will be stronger than the second half. "Sustained large deal wins in FY26, AI-first transformation tailwinds, and disciplined capital allocation have enhanced long-term visibility..." Nirmal Bang said. However, FY27 guidance reiterates the seriousness of AI led deflation, the brokerage added.

 

Nirmal Bang has kept the revenue, earnings before interest, and tax margin, and earnings per estimate unchanged as it believes that large and mega deals will limit margin expansion and Infosys will continue AI-led investments. Nirmal Bang has also maintained a 'buy' call on the stock and cut the target price 8.7% to INR 1,610. At 0925 IST, shares of Infosys were down nearly 3% at INR 1,206.80 on the National stock exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Adhithya Aji

Edited by Ashish Shirke

 

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