Infosys shares: JM Financial maintains 'buy' as IT major maintains healthy demand outlook

JM Financial continued to remain positive on Infosys Ltd as it reiterated its FY26 constant currency revenue growth guidance of 3–3.5 per cent year-on-year, following the interaction with management. It highlighted that the current demand environment remains steady compared to the start of the quarter.

JM Financial points to early signs of discretionary spending recovery within the financial services and energy, utilities & resources verticals, which together comprise 41.4 per cent of Infosys' revenue in the third quarter of FY26. Both verticals are expected to outperform in FY27 as client priorities shift from compliance to business growth, vendor consolidation, and technology modernisation.

The deal pipeline at Infosys remains robust, with a particular focus on large transformation and cost-efficiency programmes. Management emphasises that near-term growth will be driven by these initiatives, while medium-term demand is likely to benefit from modernisation of legacy technology and broader enterprise adoption of AI-enabled solutions.

Infosys has maintained its FY26 margin guidance at 20–22%. A wage hike has not yet been announced and is considered unlikely in the fourth quarter, providing a near-term margin tailwind. The management expects operational discipline, Project Maximus, and ongoing efficiency measures to offset headwinds from strategic investments, believe JM Financial.

AI continues to be a major strategic priority for Infosys. The company reiterated its view of a $300–400 billion AI services opportunity by 2030, seeing AI as structurally expansionary. AI-related revenues accounted for 5.5 per cent of revenue in Q3FY26, and are growing rapidly. Infosys has announced a collaboration with Anthropic, said JM Financial.

JM Financial notes Infosys’ valuation at approximately 17 times FY27E consensus EPS, indicating a fair balance between growth prospects and risk. The brokerage maintains its 'buy' recommendation, supported by disciplined pricing, healthy deal wins, and a sustainable margin profile relative to sector peers. JM has target price of Rs 1,660 on the stocks.

In the broader technology services sector, Infosys competes with Tata Consultancy Services Ltd (TCS), Wipro Ltd, HCL Technologies Ltd, and Tech Mahindra Ltd. The investment perspective from JM Financial underscores Infosys’ disciplined approach to cost, pricing, and transformation initiatives as differentiators in the current macroeconomic context.

Looking ahead, JM Financial anticipates that Infosys’ growth will be shaped by execution of large transformation deals, continued demand for AI and automation, and the pace of discretionary spend recovery in key verticals. Risks remain from ongoing tariff negotiations, geopolitical uncertainty, and cost pressures in certain market segments.