Infosys share price: JPMorgan, Citi, UBS, Goldman Sachs, Jefferies cut targets; stock still a Buy?

Infosys' June quarter results missed Street estimates on revenue and margins, while its cut to FY27 revenue guidance prompted brokerages to lower their price targets. The revised targets now range from a low of Rs 968 to a high of Rs 1,610, Bloomberg data compiled by Business Today showed. While most foreign brokerages still remained neutral-to-positive on the stock's prospects, a few domestic brokerages even recommended a 'Sell' or 'Reduce' rating.

This is after Infosys Ltd sharply cut its FY27 organic revenue growth guidance to minus 0.2 per cent to 1.3 per cent YoY in constant currency (CC) terms, from 1.3 per cent to 3.3 per cent previously. Including acquisitions, the guidance was revised to 1.5 per cent to 3 per cent YoY in CC terms, with the upper end lowered by 50 basis points over 1.5-3.5 per cent earlier. 

The updated guidance reflected the volatile business environment, with the lower-end assuming further macro deterioration and the top-end assuming less improvement than initially projected.

Goldman Sachs retained its 'Neutral' rating on the stock and trimmed its target price to Rs 1,110 from Rs 1,140. JPMorgan also maintained a 'Neutral' rating, cutting its target to Rs 1,050 from Rs 1,200. Citi, too, stayed 'Neutral' and lowered its target to Rs 1,065 from Rs 1,080. HSBC reiterated its 'Hold' rating, reducing its target to Rs 1,110 from Rs 1,340, while Jefferies maintained its 'Hold' rating and slashed its target to Rs 1,020 from Rs 1,235.

Among the bullish brokerages, Investec retained its 'Buy' rating but lowered its target to Rs 1,330 from Rs 1,460. UBS revised its target to Rs 1,425 from Rs 1,465. CLSA raised its target marginally to Rs 1,109 from Rs 1,093, while Nomura trimmed its target to Rs 1,290 from Rs 1,300.

Nirmal Bang (target: Rs 968) and Ambit Capital (target: Rs 990) were two domestic brokerages with 'Sell' rating on the stock. 

Also read: Infosys CEO: Ashiss Kumar Dash in, Salil Parekh to exit in 2027; impact on share price explained

"Amid a persistently challenging macro environment, clients continue to remain cautious on growth-oriented transformation spending, resulting in elongated decision-making cycles, particularly in the European automotive sector, constrained discretionary budgets, pricing pressure, heightened competitive intensity, and increasing demand for productivity-led cost savings," Antique Stock Broking said.

Given the weaker growth trajectory and reduced FY27 organic guidance, it cut its FY27 and FY28 EPS estimates by 1-3 per cent and suggested a lower target price to Rs 1,115 from Rs 1,175 earlier.

Nomura said Infosys’ revenue growth at 1 per cent sequentially in constant currency (CC terms) was lower than its expectation of 1.5 per cent  QoQ and consensus estimate of 2 per cent QoQ. It noted that Infosys' revenue growth for the quarter included 110 basis points of inorganic contribution. Infosys attributed the weakness to a one-off 50 basis points impact from a program termination by a EURS client, softer volumes and lower-than-expected pricing increases. 

EBIT margin at 21.1 per cent was better than Nomura's expectation of 20.5 per cent and in line with consensus estimate of 21.1 per cent.

"Infy noted it would be giving salary hikes to employees in two phases (juniors in Q3 and seniors in Q4). In addition, there would be some headwind from amortisation for acquisitions. Offsetting levers include currency depreciation and ongoing project Maximus," Nomura noted.

MOFSL has trimmed its FY27 and FY28 EPS estimates by 2 per cent each to factor in lower FY27 organic growth guidance and continued pricing pressure from AI-led productivity deflation. 

"While AI revenue continues to scale up rapidly, we believe productivity pass-through on the existing book of business will remain a near-term headwind. Execution on deal conversion and pricing remains a key monitorable," it said while suggesting a target of Rs 1,170 on the stock. 

While announcing its June quarter results and revised FY27 revenue guidance, Infosys also named Ashiss Kumar Dash as its CEO-designate. He will succeed Salil Parekh as CEO and MD with effect from April 1, 2027. Analysts said the appointment ensures leadership continuity through an internal succession and a structured six-month transition under Parekh, who will complete second term after 9 years at the helm.

Nuvama said Infosys guidance cut and expected ramp-down of deals in H2FY27 is likely to lead to a weak FY27 exit rate, and hence soft growth in FY28 too. 

"Alongside, CEO transition might also create an overhang on the stock. Overall, we believe Infosys is likely to underperform peers (large-cap and mid-cap), in the near to medium term. However, post recent sharp correction (down 35 per cent CYTD), stock is trading at bottom-cycle valuation (13x FY28E PE and 5.5 per cent dividend yield) and offers an attractive risk-reward profile," Nuvama said.

Parekh has been instrumental in the turnaround of the company, establishing its leadership in the digital era, and for laying the foundation for a strong and differentiated AI strategy. Under Parekh's  two terms, Infosys became $20 billion revenue company from $10 billion revenue company. 

"We have established Infosys as a leader in digital transformation and have put in place a distinctive strategy for AI transformation. We have built a strong leadership team through this journey that is deeply committed to a One Infosys agenda," Parekh said.

Parekh added that Dash brings a deep understanding of clients, business, and people, together with the vision and capability to lead Infosys through its next phase of transformation.

For the June quarter, Infosys' revenue growth was muted, with demand constrained by macro uncertainty, softer discretionary spending and AI-led productivity pressures, said Centrum Broking.

"Large deal TCV remained at $3.6 billion (61 per cent net new), supported by vendor consolidation and a healthy pipeline. While Infosys revised its FY27 revenue growth guidance to 1.5-3 per cent CC, the management remains confident in long-term growth, backed by accelerating AI adoption and strong deal execution," Centrum  Broking said as it cut its target price on Infosys to Rs 1,610 from Rs 1,794 earlier. 

Nirmal Bang Institutional Equities said Dash will work as a mentee under Salil over the next few months for a smooth transition. It said Infosys' revenue growth guidance for FY27 is in the range of 1.5-3 per cent per cent in YoY CC terms. 

"The guidance reset is explicitly scenario-based on the macro outlook rather than a single point estimate. The lower end of the revised 1.5-3 per cent CC growth band assumes further deterioration in the macro backdrop; the upper end assumes some improvement, though even that improved case is softer than what the management had underwritten back in April," it said while suggesting 'Sell' and a target of Rs 968 on the stock. 

360 ONE Capital maintained 'Hold' rating on the stock with a revised target price of Rs 1,110 from Rs 1,150 earlier, valuing the stock at 14 times FY28E EPS.