Shares of Infosys Ltd are likely to remain in focus on Friday after the IT major's fiscal first quarter earnings fell short of Street expectations, prompting a largely cautious response from brokerages. Analysts flagged a weaker-than-expected revenue performance, a second consecutive cut to revenue growth guidance, and slowing revenue conversion despite healthy deal signings. JPMorgan and HSBC downgraded Infosys stock ratings.
Infosys shares had ended Thursday at Rs 1,047.4, down 0.45 percent ahead of its earnings announcement. The stock has declined 35.4 percent so far in 2026, compared with an 8.7 percent fall in the Nifty 50, valuing the company at more than Rs 4.27 lakh crore.
Infosys on Thursday reported a 12 percent year-on-year rise in consolidated net profit to Rs 7,769 crore for the April-June quarter, missing the CNBC-TV18 estimate of Rs 7,903 crore. Revenue from operations increased 14 percent to Rs 48,211 crore but also came in below analysts' expectation of Rs 48,431 crore. The company lowered the upper end of its FY27 revenue growth guidance to 3 percent from 3.5 percent and announced the appointment of Ashiss Kumar Dash as CEO-designate. He will take over as CEO and Managing Director from April 2027, succeeding Salil Parekh.
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JPMorgan downgraded Infosys stock to Neutral from Overweight and set a target price of Rs 1,050, saying the company's revenue performance missed expectations sharply while the FY27 revenue guidance was cut for the second consecutive quarter. The brokerage said growth momentum has suffered repeated setbacks from weak demand and AI-led pricing deflation. Further, client-specific issues have hurt too, including challenges in the Daimler account and the termination of an Energy, Utilities and Resources Services contract. It added that although deal signings remain healthy, AI-related deflation is slowing the conversion of orders into revenue. Margins were broadly in line with expectations.
HSBC also downgraded the stock to Hold from Buy, cutting its target price to Rs 1,110 from Rs 1,340. While the brokerage said a reduction in guidance had been widely anticipated, it added that the magnitude of the cut exceeded consensus expectations. HSBC said that the leadership transition to CEO-designate Ashiss Kumar Dash provides clarity, but near-term operating performance is likely to remain weak despite relatively inexpensive valuations.
Not all brokerages turned bearish. CLSA retained its Outperform rating with a target price of Rs 1,109. The brokerage acknowledged that revenue growth and the guidance cut disappointed, but pointed to a better-than-expected margin performance and a steady order book. It also viewed the appointment of Dash as a positive response to concerns over the company's pace in addressing AI-driven disruption, highlighting his three-decade tenure and the significance of the first non-founder insider being chosen to lead the company.
Nomura maintained its Buy rating with a target price of Rs 1,290, arguing that the revenue miss was driven primarily by a client-specific issue. The brokerage highlighted that while the organic growth guidance was sharply reduced, the company's FY27 operating margin guidance remained unchanged at 20-22 percent. It also said the CEO transition would be a key monitorable. Nomura viewed Infosys' valuation of around 13 times FY28 earnings as attractive.