Bengaluru, India – Infosys Ltd. has seen its share price targets lowered by several prominent brokerages following a weaker-than-expected June quarter performance and a significant revision to its fiscal year 2027 (FY27) revenue growth outlook. The IT major's updated guidance, reflecting a volatile business environment, indicates a challenging period ahead.
Brokerages React to Revised Guidance
The company sharply cut its FY27 organic revenue growth guidance to a range of minus 0.2 percent to 1.3 percent year-over-year in constant currency (CC) terms. This is a notable reduction from the previous forecast of 1.3 percent to 3.3 percent. Including acquisitions, the revised guidance now stands at 1.5 percent to 3 percent year-over-year in CC terms.
In response, major foreign brokerages adjusted their Infosys stock targets:
- Goldman Sachs maintained a 'Neutral' rating, trimming its target price to Rs 1,110 from Rs 1,140.
- JPMorgan also kept a 'Neutral' rating, cutting its target to Rs 1,050 from Rs 1,200.
- Citi lowered its 'Neutral' target to Rs 1,065 from Rs 1,080.
- HSBC reiterated 'Hold', reducing its target to Rs 1,110 from Rs 1,340.
- Jefferies maintained 'Hold' and slashed its target to Rs 1,020 from Rs 1,235.
While many global firms retained neutral-to-positive stances, some domestic brokerages, including Nirmal Bang (Rs 968 target) and Ambit Capital (Rs 990 target), issued 'Sell' or 'Reduce' recommendations.
Factors Impacting Outlook
Analysts cited a persistently challenging macroeconomic environment as a key factor. Antique Stock Broking highlighted cautious client spending on growth-oriented transformation, leading to 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 were also noted.
Nomura pointed out that Infosys' revenue growth of 1 percent sequentially in constant currency terms fell short of both its own and consensus expectations. The company attributed this weakness to a one-off 50 basis points impact from a program termination by a European client, softer volumes, and lower-than-expected pricing increases.
MOFSL also noted that while AI revenue continues to scale rapidly, productivity pass-through on the existing book of business remains a near-term headwind, impacting Infosys stock targets.
Leadership Transition and Q1 Performance
Alongside its earnings announcement, Infosys named Ashiss Kumar Dash as CEO-designate, set to succeed Salil Parekh as CEO and MD from April 1, 2027. This internal succession aims to ensure leadership continuity, with a structured six-month transition period under Parekh, who has been credited with establishing Infosys' leadership in digital and AI transformation.
For the June quarter, Infosys' revenue growth was muted due to macro uncertainty and softer discretionary spending. However, large deal total contract value (TCV) remained healthy at $3.6 billion, with 61 percent being net new deals, supported by vendor consolidation. The EBIT margin stood at 21.1 percent, aligning with consensus estimates.
Despite the recent sharp correction in its stock price, Nuvama believes Infosys, trading at bottom-cycle valuations, still offers an attractive risk-reward profile, even as a CEO transition might create an overhang.