Infosys share price: Highest, lowest targets post Q2 results; buy, hold or sell?

Infosys Ltd reported a miss on its September quarter margin, even as deal wins remained strong. Analysts said its FY27 revenue guidance cut was slightly higher than anticipated, prompting mild revisions to target prices. Among 25 brokerages, Nirmal Bang has the lowest target on Infosys at Rs 902, down from Rs 968 earlier, with a 'Sell' rating. The highest target is from Asit C Mehta at Rs 1,425 apiece.

Infosys lowered its FY27 revenue growth guidance to 1-2 per cent year-on-year (YoY) from 1.5-3 per cent, despite expecting an unchanged 170 basis points (bps) contribution from acquisitions. The lower end of the range assumes further macroeconomic deterioration, while the upper end factors in an improvement in the macro environment. Nomura said Infosys cited pricing pressure from increased competitive intensity, resulting in lower-than-anticipated price increases and softer volume growth in Q2, which eventually led to the guidance revision.

"Infy noted it would be giving salary hikes to employees in two phases (juniors in 3Q; seniors in 4Q). In addition, there would be some headwinds from amortization for acquisitions, large deal ramp-up and AI productivity return to clients. Offsetting levers, according to Infy, include ongoing project Maximus and some reduction in sub-contracting expenses," Nomura said. The brokerage retained its 'Buy' rating but cut its target to Rs 1,300 from Rs 1,310 earlier.

HSBC said Infosys' guidance revision was broadly in line with its estimate, adding that the IT major now appears to be underperforming peers such as TCS, Cognizant and HCL Technologies this year.

"However, we believe this could primarily reflect the timing of two or three large deals' ramp-down/losses and could prove cyclical rather than structural. A positive development in 2Q was the signing of a $2 billion mega-deal, which is expected to contribute approximately 1% incremental growth in FY28," HSBC said.

While weaker growth in H2 is now largely reflected in expectations, margins remain vulnerable to downside surprises, HSBC said. Currency movements are a headwind, while the implementation of this year's wage increases in H2 is likely to add further pressure. The brokerage retained its target on the stock at Rs 1,110.

Among segments, Financial Services, Energy & Utility Services and Manufacturing continued to see strong demand, while Retail and Hi-Tech in the US remained specifically weak due to subdued discretionary demand and client-specific issues, BNP Paribas said. Retail also saw higher third-party revenue in the previous quarter, contributing to the decline, the brokerage added.

Among other brokerages, CLSA suggested 'Hold' and raised its target to Rs 1,003 from Rs 976. UBS suggested 'Buy' but cut its target to Rs 1,415 from Rs 1,430. JPMorgan maintained its 'Neutral' rating and target of Rs 1,050. Jefferies cut its target to Rs 1,140 from Rs 1,160, while Citi raised its target to Rs 1,105 from Rs 1,030. Morgan Stanley also raised its target, to Rs 1,075 from Rs 976.