Infosys is at the centre of investor attention today. The share price of the company fell 1% in the early trade today. This is because the IT conglomerate June quarter (Q1FY27) results brought a weaker-than-expected growth outlook, a cut in full-year guidance and the announcement of its next Chief Executive Officer (CEO).
What was the next reaction? Target prices have been revised, earnings estimates have been trimmed and analysts have become more cautious about the near-term growth outlook.
Yet, there is something interesting to watch.
Despite lowering expectations, most brokerage houses have continued to maintain their ‘Buy’ ratings on the stock.
So, what exactly changed after the June quarter? Why are analysts still positive despite a weaker outlook?
Let’s take a look at what four leading brokerage houses have interpreted Infosys’ latest earnings –
Motilal Oswal on Infosys: Growth outlook weak, but long-term outlook intact
Motilal Oswal has retained its ‘Buy’ rating on Infosys with a revised target price of Rs 1,170. This translates to an upside potential of around 12% from the current market price.
Motilal Oswal in its report added that the biggest concern is the sharp reduction in the company’s organic constant currency (CC) revenue growth guidance for FY27. Infosys has lowered its organic growth outlook from around 1.25-3.25% earlier to (-0.2%) to 1.3%.
The brokerage noted that slower client spending and weak demand continue to weigh on growth. It said, “Steep guidance downgrade points to increasing pressure on growth.”
Another factor highlighted in the report is the growing impact of Artificial Intelligence (AI)-led productivity improvements. According to Motilal Oswal, companies are increasingly demanding productivity gains, making it difficult for IT firms to convert large deal wins into revenue growth.
The report added, “Productivity deflation not quantified but remains substantial.”
While Infosys continues to report healthy large deal wins, the brokerage believes deal values alone may no longer indicate future revenue growth as AI-driven efficiencies continue to reduce billing opportunities.
Nuvama on Infosys: Near-term pressure but valuations attractive
Nuvama has also maintained its ‘Buy’ recommendation, although it has sharply reduced its target price to Rs 1,250 from Rs 1,650.
The brokerage report added that Infosys’ revised guidance now points to barely 1% organic growth during FY27.
The brokerage has therefore reduced its earnings estimates for both FY27 and FY28.
However, despite the weaker outlook, Nuvama believes the recent correction in the stock price has made valuations attractive.
The report noted that the stock is currently trading at a “bottom-cycle valuation of 13x FY28 PE.”
Infosys could continue to underperform some of its large-cap and mid-cap peers over the near to medium term because of weaker growth visibility and the upcoming CEO transition, as per the brokerage house report.
Even so, it believes the current valuation offers an attractive risk-reward opportunity for long-term investors.
Nomura on Infosys: Margin guidance intact despite slower growth
Global brokerage house Nomura has retained its ‘Buy’ rating while slightly reducing its target price to Rs 1,290 from Rs 1,300.
The report noted that revenue growth during the June quarter fell short of expectations due to softer client volumes, lower pricing improvements and the impact of a major client programme termination.
Even after the guidance cut, Nomura highlighted that Infosys has maintained its 20-22% Earnings Before Interest and Taxes (EBIT) margin guidance for FY27.
The brokerage also believes the planned leadership transition appears well structured.
It noted, “Smooth CEO transition remains a key monitorable.”
Infosys has appointed long-time company executive Ashiss Kumar Dash as CEO-designate. He will take over from Salil Parekh in April 2027.
Nomura believes the overlap between the outgoing and incoming CEOs should help ensure a smoother transition.
JM Financial on Infosys: Lower growth visibility prompts rating downgrade
JM Financial has taken a relatively more cautious stance.
Following the June quarter results, the brokerage has downgraded Infosys to ‘Add’ while reducing its target price to Rs 1,115 from Rs 1,230.
Revenue growth disappointed during the quarter, while the revised guidance indicates slower momentum in the remaining quarters of FY27, JM financial highlighted in the report.
The brokerage noted that weaker client demand, pricing pressure, AI-led productivity gains and lower contribution from key European clients have all weighed on the company’s outlook.
The report also said that growth visibility for the final quarter of FY27 remains uncertain.
However, JM Financial added that current valuations appear reasonable after the recent correction, which explains why it has stopped short of issuing a negative recommendation.
Infosys: What are brokerages really saying?
Most brokerages believe demand remains under pressure because of cautious client spending, AI-led productivity gains and macroeconomic uncertainty. The leadership transition also adds another factor that investors will watch closely over the coming quarters.
At the same time, brokerages believe the recent correction has brought valuations closer to long-term averages.
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