Infosys raises guidance, but caution lingers; is it time to buy, hold, or sell?

Infosys share price targets: Infosys reported a strong set of June quarter results, with its revenue and profit growth, and deal wins, beating Street estimates, while the raising of the lower end of FY26 guidance to 1-3 per cent from 0-3 per cent met analyst expectations. That said, the gudaince hints at lower growth organically after Q1 results. Besides, there was no major change in commentary over the March quarter amid a lack of any material improvement in discretionary budgets or decision cycles. Stock analysts are neutral to positive on the Infosys stock due to its inexpensive valuations after 17 per cent slide in 2025 so far.

"Despite the strong Q1, Infosys continues to see a wait-and-watch posture among clients, with no material improvement in discretionary budgets or decision cycles. Tariff uncertainties and geopolitical tensions continue to weigh on sentiment. Management stated that the macro environment remains unchanged vs. 4Q, which was a key reason for the cautious stance on guidance," MOFSL said.

For Nuvama, Infosys reported solid growth – both in magnitude and quality (lower third-party revenue).

"The guidance upgrade was a tad soft – but understandably so, given the overall macro uncertainty. We maintain FY26E/27E EPS and upgrade our target multiple to 25x FY27PE (earlier 24x) on higher growth expectations. Retain 'Buy' with target of Rs 1,850 (earlier Rs 1,700)," Nuvama said.

MOFSL said while the organic revenue guidance was cut at the upper end by 40 bps, the actual performance trajectory has improved. Earlier, MOFSL assumed 2 per cent CC growth for FY26E. But now it feels the IT firm could potentially deliver 2.5 per cent organic growth now, on the back of a stronger 1H.

"Infosys work in Enterprise AI has been promising, but near-term catalysts remain limited. Our estimates are unchanged. We value Infosys at 24x FY27E EPS. This yields a rounded target price of Rs 1,750, implying an 11 per cent potential upside. We reiterate our Neutral rating on the stock," MOFSL said.

Nirmal Bang said the sustained large deal wins, AI-first transformation tailwinds, and disciplined capital allocation have enhanced long-term visibility, while the uncertainty in macro will limit Infosys in increasing the upper end of the guidance after 1HFY26, which is seasonally the stronger part of the year for the company.

"Post 1QFY26, we believe that the cautious commentary from the management, lower organic growth guidance, and lower third-party revenue will be balanced by margin expansion, order book growth, and improving free cash flows. In light of this, we largely leave our revenue and EPS estimates unchanged for FY27/FY28 and reiterate our ‘HOLD’ rating with a higher target of Rs 1,746 (earlier Rs 1,686) due to the 1Q beat," it said.

Nuvama expects the demand environment to remain challenging for the next one–two quarters due to macro uncertainty. However, it remained positive on medium-to-long term outlook, as technology debt is very high for enterprises, which will warrant revival in spending as macro improves.

"Infosys appears to be well placed to capture that opportunity. Valuations, at 21x FY27PE, are not expensive either. Maintain 'BUY/SN'," it said.