Synopsis : Infosys cut its FY27 revenue guidance after a weaker June quarter, prompting brokerages to trim target prices. Despite near-term concerns, most analysts continue to retain a positive long-term view on the stock.
Infosys has once again become one of the most closely watched stocks in the IT sector after reporting its June-quarter (Q1FY27) earnings.
The stock slipped around 1% in early trade after the company announced weaker-than-expected revenue growth, lowered its full-year guidance and unveiled its next Chief Executive Officer (CEO).
The immediate reaction from analysts was mixed. Target prices were reduced, earnings estimates were revised lower and near-term growth expectations became more cautious.
Yet, despite these concerns, most brokerage firms have continued to maintain their 'Buy' recommendations.
So, why are analysts still optimistic despite weaker guidance?
Here's how four leading brokerage houses are interpreting Infosys' latest earnings.
Motilal Oswal: Growth concerns rise but long-term story remains intact
Motilal Oswal has maintained its 'Buy' rating on Infosys while revising its target price to ₹1,170, implying an upside of around 12%.
The brokerage believes the biggest disappointment was the sharp reduction in Infosys' FY27 organic constant currency (CC) revenue growth guidance.
The company has lowered its guidance from 1.25%-3.25% earlier to (-0.2%) to 1.3%.
According to Motilal Oswal, slower client spending continues to weigh on demand.
The brokerage also highlighted another emerging challenge—Artificial Intelligence (AI)-driven productivity gains.
As enterprises increasingly expect vendors to deliver greater productivity through AI, large deal wins may no longer translate into proportional revenue growth.
Motilal Oswal noted that although Infosys continues to secure large contracts, AI-driven efficiencies are reducing billing opportunities across the industry.
Nuvama: Valuations now look attractive
Nuvama has also retained its 'Buy' recommendation, although it sharply reduced its target price from ₹1,650 to ₹1,250.
The brokerage believes Infosys' revised guidance now points towards only around 1% organic revenue growth during FY27.
As a result, it has lowered its earnings estimates for both FY27 and FY28.
Despite weaker growth visibility, Nuvama believes the recent correction has significantly improved the stock's valuation.
According to the brokerage, Infosys is currently trading at a bottom-cycle valuation of around 13x FY28 price-to-earnings.
While the company could continue to underperform some large-cap and mid-cap peers in the near term due to slower growth and the upcoming CEO transition, Nuvama believes current valuations offer an attractive long-term risk-reward opportunity.
Nomura: Margins remain the key positive
Global brokerage Nomura has retained its 'Buy' rating while marginally reducing its target price from ₹1,300 to ₹1,290.
Nomura believes the June-quarter revenue growth was affected by:
- Softer client volumes
- Lower pricing improvements
- The termination of a major client programme
However, one important positive remains intact.
Infosys has maintained its FY27 EBIT margin guidance of 20%-22%, despite reducing revenue growth expectations.
The brokerage also believes the company's leadership transition appears well planned.
Infosys has appointed long-time executive Ashiss Kumar Dash as CEO-designate, who will succeed Salil Parekh in April 2027.
Nomura expects the extended transition period to help ensure operational continuity while minimising disruption.
JM Financial: More cautious after guidance downgrade
JM Financial has adopted a relatively more cautious stance.
The brokerage downgraded Infosys to 'Add' from its earlier recommendation and reduced its target price from ₹1,230 to ₹1,115.
According to the brokerage, revenue growth during the June quarter disappointed expectations, while the revised guidance suggests slower momentum through the remainder of FY27.
JM Financial highlighted several challenges facing Infosys:
- Weak client spending
- Pricing pressure
- AI-led productivity improvements
- Lower contribution from key European clients
The brokerage also believes revenue visibility for the final quarter of FY27 remains uncertain.
However, it stopped short of issuing a negative recommendation, noting that valuations have become more reasonable following the recent decline in the share price.
What are brokerages saying overall?
Despite differences in target prices and earnings estimates, a common theme has emerged across brokerage reports.
Most analysts believe the near-term environment remains challenging because of:
- Cautious enterprise technology spending
- AI-driven productivity gains
- Pricing pressure
- Global macroeconomic uncertainty
The upcoming CEO transition will also remain an important factor that investors monitor over the coming quarters.
At the same time, analysts broadly agree that the recent correction has brought Infosys' valuation much closer to historical averages, making the stock more attractive from a long-term perspective.
Conclusion
Infosys' June-quarter results have undoubtedly weakened near-term growth expectations after the company reduced its FY27 revenue guidance.
While slower client spending, AI-led productivity improvements and pricing pressure continue to cloud the outlook, most brokerages believe the long-term investment case remains intact.
Motilal Oswal, Nuvama and Nomura continue to maintain 'Buy' ratings, citing attractive valuations, healthy margins and a structured leadership transition.
JM Financial has become relatively more cautious but still believes the stock appears reasonably valued after its recent correction.
For investors, the key monitorables over the coming quarters will be demand recovery, execution under the new leadership roadmap and the company's ability to convert large deal wins into sustainable revenue growth.
Disclaimer: The brokerage recommendations, target prices and earnings estimates mentioned in this article are based on research published by Motilal Oswal, Nuvama, Nomura and JM Financial. They are presented solely for informational and educational purposes and do not constitute investment advice or a recommendation to buy, sell or hold any security. Equity investments are subject to market risks, and brokerage forecasts are not guaranteed. Investors should conduct their own research and consult a SEBI-registered investment advisor before making any investment decisions.
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