Brokerages Favour Infosys After Q1 Earnings Beats Expectations

Shares of Infosys opened with marginal cuts on July 24 as investors booked profits following a steady set of earnings for the June quarter that largely beat the Street’s expectations. This came after the company’s American Depository Receipts (ADRs), listed on the NYSE, rose 3% overnight.

Despite the muted market reaction, brokerages came in favour of the information technology giant, holding on bullish views, especially in lieu of its attractive valuations.

In Q1 of FY26, Infosys posted a 1.6% sequential decline in consolidated net profit at ₹6,921 crore. Revenue from operations, however, rose 3.3% to ₹42,279 crore. Operating margins eased slightly to 20.8% in the June quarter, from 21% in Q4 of FY25.

However, what caught the attention of analysts and investors like was the company's revenue guidance. Infosys raised its constant currency revenue growth forecast for FY26 to 1–3%, from 0–3% earlier.

While the upgrade appeared entirely positive at first glance, brokerages were quick to note that including the 0.4% contribution from recent acquisitions, the higher end of the guidance range actually reflects a minor downward revision. That said, the management clarified that the ongoing tariff induced macro uncertainty in a seasonally strong part (H1) and usual weak seasonality in H2 for Infosys, are key reasons for the guidance change.

The pressure was particularly visible in the manufacturing and retail verticals, though management pointed to opportunities in Europe, largely driven by consolidation and outsourcing trends.

Taking note of the ongoing challenges grappling the IT sector, brokerage houses were also largely optimistic over Infosys. Nuvama Institutional Equities called the quarter a solid one, in both quality and growth, even while highlighting a decline in third-party revenues. It maintained a ‘buy’ rating but lifted its price target to ₹1,850 from ₹1,700.

Along similar lines, Morgan Stanley touted the performance ‘balanced’ compared to peers and expects Infosys to deliver the strongest Ebit growth among large-cap IT players this year. The brokerage reiterated its ‘overweight’ call with a ₹1,700 target.

CLSA said Infosys’ results ‘ticked all the right boxes’ and stuck to its ‘outperform’ view, setting a target of ₹1,861. Bernstein echoed the sentiment, noting that the company beat revenue and deal flow expectations, and kept its ‘outperform’ rating.

Meanwhile, Nomura doesn’t expect any further salary hikes over the next 2–3 quarters, given that increments for the entire workforce have already been implemented in the last two. The brokerage believes lower third-party expenses will act as a key margin tailwind, helping offset potential ramp-up costs from large deal wins in FY26F. Infosys remains Nomura’s top pick in the IT space, with the firm reiterating its ‘buy’ rating and a price target of ₹1,880.

In short, Infosys has delivered a stable quarter amid a choppy environment. While the upgrade to revenue guidance offers some comfort, markets will be watching for signs of broader recovery in client sentiment before going entirely bullish over the stock.