Infosys reported its results on Thursday where it cut the upper end of its financial year 2027 revenue growth guidance by 50 basis points. The guidance now reads 1.5% to 3% in constant currency terms from 1.5% to 3.5% earlier.
By Hormaz Fatakia
Shares of Infosys Ltd., the Bengaluru-based technology services provider, fell as much as 2% in reaction to their first quarter results that were reported after market hours on Thursday. The results have resulted in multiple downgrades for the company.
Despite the downgrades, nearly two-thirds (67%) of the 51 analysts who cover the stock have a "buy" rating, while 14 of them have a "hold", and three have a "sell" rating on the stock.
Why Did HSBC Downgrade Infosys?
HSBC is one among the two major downgrades that Infosys has received after its results. The brokerage has downgraded its rating on the stock to "hold" from its earlier rating of "buy" and also cut its price target to ₹1,110 from ₹1,340 earlier.
It wrote in its note that while the guidance cut was anticipated, the quantum was higher than consensus expectations.
Although HSBC called Infosys' near-term valuations to be "inexpensive", it expects the near-term quarters to be weak.
Why Did JPMorgan Downgrade Infosys?
JPMorgan has also downgraded Infosys to "neutral" from its earlier rating of "overweight" and has a price target of ₹1,050 on the stock.
It called the revenue guidance cut sharp and added that growth momentum has now taken multiple hits including weak demand, rising AI deflation, and challenges at Daimler and an Energy, Utilities Resources Services (EURS) contract termination.
The new organic guidance from Infosys which ranges from a negative 0.2% to a positive 1.3% points to a sharp slowdown and that too depends on sustaining a 0.4% to 1.4% Compound Quarterly Growth Rate (CQGR) in a tough environment.
CLSA Remains Optimistic
The brokerage has maintained its "outperform" rating on Infosys with a price target of ₹1,109.
CLSA said that while the guidance cut was disappointing, EBIT margins were a beat and order book was also steady.
It called the appointment of Ashiss Kumar Dash as CEO-designate as the first instance in the history of Infosys that an insider non-founder has been entrusted with the opportunity.
Nomura Says "Buy" Infosys
Nomura has maintained its "buy" recommendation on Infosys with a price target of ₹1,290. It called the negative revenue surprise to client specific issues, and added that the stock is currently trading at attractive valuations.
Infosys reported its results on Thursday where it cut the upper end of its financial year 2027 revenue growth guidance by 50 basis points. The guidance now reads 1.5% to 3% in constant currency terms from 1.5% to 3.5% earlier.
Salil Parekh will also be stepping down as MD & CEO at the completion of his term next year and will be replaced by Ashiss Dash from April 1, 2027 onwards.
Shares of Infosys had ended little changed on Wednesday after the results announcement at ₹1,052.9. The stock is down 35% so far this year. Its US-listed shares or ADRs ended 2.5% lower overnight.
This will be updated with more recommendations from analysts.