Infosys Share Price: IT stock in focus after Q2 profit rises 6.2%; Brokerages split on outlook – BUY, SELL or HOLD? – Markets

Infosys Share Price: Shares of Infosys will be in focus on October 26 after the IT major reported a 6.2 per cent rise in consolidated net profit to Rs 7,823 crore for the quarter ended September 30. Following the Q2 results, brokerages, including Citi, HDFC Securities, Morgan Stanley and Goldman Sachs, have shared their ratings and share price targets for the stock.

Infosys shares settled 0.3 per cent, or Rs 3.50, higher at Rs 1,154.50 in the previous trading session. The stock has risen over 12 per cent in the last two weeks and over 13 per cent in the last month.

The IT company reported a stable operating margin of 21 per cent year-over-year. However, it reduced its revenue growth guidance for the year to 1 per cent to 2 per cent from the earlier projection of 1.5 per cent to 3 per cent, primarily due to pricing pressure.

Infosys’ consolidated revenue from operations grew 10.2 per cent to Rs 49,244 crore in the reported quarter, compared with Rs 44,490 crore in the year-ago period.

“Based on our Q2 performance and revised outlook for the rest of the year, our revenue growth guidance is 1 per cent to 2 per cent year-over-year in constant currency terms. Operating margin guidance remains at 20 per cent to 22 per cent for the year,” Parekh said.

The company also recorded a 4,000-person rise in headcount.

Infosys Share Price Target

Following the Q2 results, brokerage ratings on Infosys remain largely neutral, with three brokerages maintaining Neutral or Equal-Weight ratings, while HDFC Securities has retained its Buy recommendation.

Citi has maintained its Neutral rating on Infosys while raising its target price to Rs 1,105 from Rs 1,030. Against the closing price of Rs 1,154.50, the revised target indicates a downside potential of 4.29 per cent.

The brokerage said Infosys is executing reasonably well despite industry challenges but expects growth to remain slow. It added that the new mega deal addresses concerns about the company starting FY28 at a disadvantage compared with peers.

However, cautious client spending and intense competition around AI productivity continue to weigh on the outlook. Citi has maintained a cautious view on the sector.

HDFC Securities Maintains Buy

HDFC Securities has maintained its Buy rating on Infosys with a target price of Rs 1,250. Based on the closing price of Rs 1,154.50, the target implies an upside potential of 8.27 per cent.

The brokerage highlighted large deal wins, including a net-new mega deal, and strong AI traction as key positives for the company.

However, soft volumes, muted pricing and a cautious second-half outlook have weighed on growth, prompting management to cut FY27 revenue growth guidance. HDFC Securities said EBIT margin guidance remains unchanged despite expected headwinds, while estimates have been trimmed slightly.

Morgan Stanley Raises Target Price to Rs 1,075

Morgan Stanley has maintained its Equal-Weight rating on Infosys while raising its target price to Rs 1,075 from Rs 976. The revised target indicates a downside potential of 6.88 per cent from the closing price of Rs 1,154.50.

The brokerage said Infosys’ second-quarter FY27 revenue and margins missed estimates and consensus expectations. It added that the FY27 guidance cut was in line with its expectations.

According to Morgan Stanley, strong deal wins could partly offset FY28 revenue headwinds, but the growth inflection depends on converting deal wins into revenue. Weak discretionary spending, competition and AI-related pricing pressures remain concerns, with no clear near-term catalyst.

Goldman Sachs Maintains Neutral

Goldman Sachs has maintained its Neutral rating on Infosys with an unchanged target price of Rs 1,000. The target implies a downside potential of 13.38 per cent from the closing price of Rs 1,154.50.

The brokerage described the quarter as largely in line but flagged poor revenue visibility and a second consecutive cut in FY27 guidance. It said the guidance midpoint now implies modest negative organic growth.

Goldman Sachs added that the mega deal win should partly cushion FY28 revenue headwinds arising from client exits. However, a sluggish demand environment, client ramp-downs and competitive pricing pressures continue to constrain the outlook.

(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.)