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Infosys’ Q4FY26 results came largely in line with expectations, but brokerages turned cautious on the stock after management flagged slower growth ahead. While margins held within the guided range and large deal wins offered some support, a 1.3 per cent constant currency revenue decline and soft client sentiment weighed on the outlook. Street sentiment soured further after Infosys guided for FY27 revenue growth of just 1.5–3.5 per cent, prompting several analysts to trim earnings estimates and lower target prices amid concerns over AI-led pricing pressure, macro uncertainty, and client ramp-downs.
- The brokerage maintains ‘Buy’ with target price of Rs 1,650
- Q4FY26 revenue declined 1.3 per cent QoQ CC due to seasonality and weak demand
- EBIT margin stood at 21 per cent, down 20bps QoQ due to cost pressures
- FY27 revenue guidance at 1.5–3.5 per cent seen weak and below expectations
- Growth impacted by client ramp-down, AI-led pricing pressure and macro issues
- Strong deal wins remained highlight with TCV at USD3.2bn
- BFSI and E&U segments showed traction led by large deal ramp-ups
- Manufacturing, Consumer and Telecom segments remained subdued due to cautious spending
- Margin guidance maintained at 20–22 per cent despite wage hikes and investment pressures
- Maintain ‘Buy’ with target price of Rs 1,450 (Upside 16.8 per cent)
- Soft operating performance in Q4 FY26, with missed revenue estimates, though margin was in line
- Revenue declined 1.3 per cent CC QoQ due to seasonality and slower decision making in march
- Q1 FY27 to be stronger than Q2 FY27 aided by healthy deals and normal seasonality
- To cut FY27-28E EPS by 0.5 per cent – 1 per cent factoring in Q4 results and guidance
- AI compression offset by expanded deal scope and new services
- Management aims to sustain EBITM in the range of 20-22 per cent, despite headwinds from wage hikes, productivity pass-throughs, 70bps impact from acquisitions, and AI investments
HDFC Securities on Infosys
- The brokerage maintains ‘Buy’ with target price of Rs 1,550 (maintained)
- Q4 revenue declined 1.3 per cent QoQ CC impacted by seasonality and weak client decision-making
- FY27 revenue guidance at 1.5–3.5 per cent YoY below expectations reflecting macro uncertainty
- Demand environment remains weak with focus on cost optimization over transformation
- AI-led growth scaling but offset by deflation in core portfolio due to productivity pass-through
- Large deal wins strong with FY26 TCV at USD 14.9bn ( over 24 per cent YoY)
- Margins declined marginally to 20.9 per cent due to amortisation and compensation headwinds
- Estimates cut by 2–3 per cent amid slower growth outlook
- Value the stock at 18 times Mar-28E EPS
Morgan Stanley on Infosys
- The brokerage maintains ‘Equalweight’ with target price Rs 1,380 (revised downward from Rs 1,760)
- Q4 miss across key metrics with weak revenue growth outlook
- FY27 revenue guidance of 1.5–3.5 per cent indicates lack of growth acceleration
- F27 organic growth expected at 2.5 per cent, broadly in line with peers
- Ramp-down of large European client negatively impacts growth outlook
- AI-led productivity and pricing pressure impacting core business competitiveness
- Margins expected at 20.5–21.0 per cent with headwinds from wage hikes and M&A
- Estimates cut but EPS supported by currency tailwinds
- Valuations correcting closer to peers offering downside protection
- Value the stock at 15.8 times P/E
Infosys reported a 27.8 per cent quarter-on-quarter growth in its consolidated net profit to Rs 8,501 crore in the quarter ended March 31, 2026. It stood at Rs 6,654 crore in the previous quarter. On a year-on-year (YoY) basis, the consolidated net profit increased 21 per cent YoY from Rs Rs 7,033 crore in the same period last year.
The topline was 2 per cent higher quarter-on-quarter versus Rs 45,479 crore in the October-December quarter of FY26. The IT major’s revenue from operations stood at Rs 46,402 crore in the January-March quarter of FY26 against Rs 45,479 crore posted in the previous quarter, representing an increase of 2 per cent QoQ. YoY, it was up 13.4 per cent from Rs 40,925 crore posetd in the corresponding quarter of the previous financial year.
Earnings Before Interest and Taxes (EBIT) reported a growth of 1 per cent QoQ to come in at Rs 9,743 crore in Q4 FY26 from Rs 9,644 crore in the previous quarter. EBIT margin declined 30 bps at 20.9 per cent in Q4 FY26 against 21.2 per cent in the previous quarter.
USD revenue at USD 5,040 mn vs USD 5,099 mn, down 1.2 per cent (est USD 4,989)
INR Revenue at Rs 46,402 cr vs Rs 45,479 cr, up 2 per cent (Rs 46,135)
EBIT at Rs 9,743 cr vs Rs 9,644 cr, up 1 per cent (est Rs 9,793)
PAT at Rs 8,501 cr vs Rs 6,654 cr, up 27.8 per cent (Rs 7,518)
EBIT margin at 21 per cent vs 21.2 per cent, down 30 bps (est 21 per cent)
Q4 CC growth saw a decline of 1.3 per cent QoQ (vs decline of 2.2 per cent expected)
Large deal TCV at USD 3.2 bn for Q4 vs USD 4.8 bn, down 33.3 per cent QoQ
(better vs est of USD 2.5-2.75 bn)
Large deal TCV at USD 14.9 bn
Free cash flow of USD 0.8 bn in Q4
Attrition at 12.6 per cent Vs 12.3 per cent QoQ
Added 111 new clients in Q4
Final dividend of Rs 25/share
FY27 revenue growth guidance of 1.5 per cent – 3.5 per cent (vs 3-3.5 per cent guidance in FY26)
FY27 operating margin guidance of 20-22 per cent (same as FY26)
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
