Prabhudas Lilladher has maintained a 'Buy' rating on Infosys with a target price of ₹1,240, despite the company's disappointing Q1FY27 performance. The brokerage's research report dated July 23, 2026 highlights that while organic revenue performance was flat quarter-on-quarter in constant currency (CC), below their estimate of 0.8% QoQ CC, the valuation comfort at 12x FY28E EPS and payout yield of ~6% should provide near-term cushion to the price. Prabhudas Lilladher has assigned a PE of 15x (16x earlier) to FY28 EPS with the revised target price, maintaining their bullish stance on the stock. The brokerage notes that large deal momentum remained healthy at US$3.6 billion TCV with 61% net new, including three ~US$400 million deals and 20% of wins from vendor consolidation, though being selective on deal economics and prolonged decision-making are blurring the near-term growth outlook.
JPMorgan and HSBC downgraded Infosys stock ratings following the company's disappointing Q1FY27 performance, with JPMorgan downgrading to Neutral from Overweight and setting a target price of ₹1,050, while HSBC downgraded to Hold from Buy, cutting its target price to ₹1,110 from ₹1,340. The downgrades reflect concerns over sharp revenue misses, second consecutive guidance cuts, and slowing growth momentum from weak demand and AI-led pricing deflation. JPMorgan highlighted that growth momentum has suffered repeated setbacks from weak demand and AI-led pricing deflation, while HSBC noted that the magnitude of the guidance cut exceeded consensus expectations. Despite the negative sentiment, CLSA retained its Outperform rating with a target price of ₹1,109, acknowledging that revenue growth and guidance disappointments were driven primarily by client-specific issues, while Nomura maintained its Buy rating with a target price of ₹1,290, viewing the valuation of around 13 times FY28 earnings as attractive. Motilal Oswal maintains a buy call with a target price of ₹1,170, indicating an upside potential of 12%, though it has trimmed FY27E/FY28E EPS estimates by ~2% to factor in lower FY27 organic growth guidance and continued pricing pressure from AI-led productivity deflation. Morgan Stanley maintained an equal-weight rating but cut its target price to ₹1,075 from ₹1,112, calling the results worse than feared, while Jefferies maintained a hold rating and cut its target price to ₹1,020 from ₹1,235. BofA maintained a buy rating but cut its target price to ₹1,300 from ₹1,570, highlighting good execution on the AI business and profitability, and Elara Capital revised Infosys to accumulate from buy and lowered its target price to ₹1,150 from ₹1,530.
Infosys delivered robust financial results for the June quarter, reporting consolidated net profit of ₹7,769 crore, down 8.6% sequentially from ₹8,501 crore in the March quarter, though this missed the CNBC-TV18 estimate of ₹7,903 crore. Revenue from operations increased 3.9% quarter-on-quarter to ₹48,211 crore from ₹46,402 crore, broadly matching Street estimates of ₹48,222 crore. In US dollar terms, the company reported revenue of USD 5,082 million, reflecting a year-on-year growth of 2.4% and sequential growth of 1% in constant currency terms. Earnings before interest and tax (EBIT) increased 4.3% sequentially to ₹10,163 crore from ₹9,743 crore, while the EBIT margin improved marginally to 21.08% from 20.99% in the previous quarter. On a sequential basis, net profit declined 8.6% from ₹8,501 crore reported in the March quarter (Q4FY26). The operating margin stood at 21.1%, compared with 20.8% in the same quarter last year and 21% in the March quarter. AI Services contributed 8.2% of June quarter revenue, equivalent to approximately $417 million, compared with 5.5% reported during its AI Day earlier this year. Financial services, the main contributor of revenue, was up 2.4% in constant currency Y-o-Y, with total employee count at the end of the quarter standing at 328,062, down 532 people. Attrition for the quarter was at 13%, up from 12.6% reported in Q4FY26.
Infosys announced a significant leadership transition with the appointment of Ashiss Kumar Dash as CEO-designate, who will take over as Chief Executive Officer and Managing Director from April 1, 2027 for a five-year term. Dash, a 31-year Infosys veteran, currently leads the Services, Utilities, Resources, Energy and Enterprise Sustainability businesses and has worked across delivery, sales and account management. Chairman Nandan Nilekani described him as someone who has "worked across delivery, sales and account management," while CEO Salil Parekh highlighted Dash's extensive experience across clients and people leadership. 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. Commenting on the appointment, Nandan Nilekani said, "The board is delighted to appoint Dash as CEO designate. Our industry is entering a period of considerable change. The board was clear that our next CEO needed to combine the ability to drive bold transformation with the judgment to preserve the values and customer trust that have always distinguished Infosys." The appointment provides comfort around the leadership transition, with analysts noting that investors are likely to monitor a smooth CEO transition as a key factor going forward. This marks the first time in Infosys's 45-year history that an internal, non-founder executive has been chosen to lead the company, reflecting its meritocratic culture. Nomura believes the overlap between the outgoing and incoming CEOs should help ensure a smoother transition, noting that "Smooth CEO transition remains a key monitorable."
The company's performance reflects broader challenges in the IT services sector, with Infosys narrowing its FY27 revenue growth guidance to 1.5%-3% from 1.5%-3.5%, marking the second consecutive quarter of guidance cuts. Sequential constant-currency (CC) revenue grew just 1% in Q1FY27, missing the Street's 2% growth estimate, with the drag primarily coming from a 50-basis-points impact from the termination of a programme by an energy, utilities, resources and services (EURS) client, softer volumes and lower-than-expected pricing increases. Revenue fell sequentially across all geographies except North America, where growth was partly supported by the Optimum acquisition. The communications segment also declined sequentially. Management revised FY27 revenue guidance to 1.5-3.0% CC, which includes ~1.7% inorganic contribution from acquisitions, implies an organic growth outlook of ~flat-1.3% CC. The guidance factors in 100bps headwind from the large European manufacturing client and ~75-100bps impact from offshore delivery transition, along with the effect of weaker Q1 volumes. Client-specific issues have hurt performance, including challenges in the Daimler account and the termination of an Energy, Utilities and Resources Services contract. Management noted continued weakness in the communications and retail verticals, while financial services is expected to outgrow the company average. Prabhudas Lilladher has lowered their FY27E/FY28E CC revenue growth estimates to 2.0%/3.5% (from 4.0%/4.7% earlier), while maintaining EBIT margin estimates at 21.2%/21.4%, as Project Maximus, currency benefits and improved utilization should largely offset wage hikes, acquisition dilution and continued AI investments. Prabhudas Lilladher has cut their FY27E/FY28E EPS estimates by 1.8%/2.7%, citing the steep cut in organic growth guidance and contract termination by a client. Anand Rathi noted that AI-led revenue compression may accelerate beyond current estimates, during renewals, competitive intensity on pricing could intensify further, worsening macro conditions, and closure timelines of the Versent acquisition. Elara Capital cut their USD revenue growth estimates for FY27E/28E by 3–4% and earnings by 4–6%, citing the steep cut in organic growth guidance and contract termination by a client. Systematix has lowered their FY27E/FY28E/FY29E earnings estimates for Infosys by 0.5%-1.8%, factoring in recent performance, cut in upper-end of guidance, higher competitive intensity across industry and client-specific issues.
