Infosys stock gains despite Q4 miss, investors focus on guidance; brokerages unimpressed, cut targets

Infosys shares have eked out a minor gain of one percent over the past 12 months.

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26 Aug, 2025 12:21

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Information technology bellwether Infosys Ltd. shares rose on April 21, following its March quarter earnings show.

For the three months ended March, the IT player posted a 12 percent year-on-year (YoY) fall in net profit to Rs 7,033 crore in the fourth quarter of FY25. On a sequential basis, the company’s bottom-line rose 3.3 percent.

Consolidated revenue for the quarter came in at Rs 40,925 crore, up 7.9 percent YoY. However, on a constant currency basis, revenues declined by 3.5 percent on a sequential basis, while rising 4.2 percent YoY.

However, a key positive, buoying the stock price in trade, is the management's guidance for the current financial year. Infosys guided for a revenue growth between zero and three percent for FY2025-26. Compared to its IT services peers, Infosys did not call out project ramp-downs.

At close, shares of Infosys were 2.1 percent higher on the NSE, quoting Rs 1,449 apiece.

Should you buy, sell, or hold Infosys shares?

Infosys reported a 3.5 percent constant currency decline in revenues QoQ, below the consensus estimates of a one percent decline. The weaker-than-expected Q4 results were driven by lower third-party revenue (two–thirds of fall). Lower volumes (normal seasonality) explained the rest.

Motilal Oswal noted that the upper end of Infosys’ guidance (three percent YoY organic cc growth) assumes a ‘stable to marginally improving environment’, according to management. "We found this to be notably positive; we assume FY26 could end up at 2 percent YoY organic cc growth, ahead of most large-caps. We build in ~0.5 percent contribution from acquisitions for the year."

On the flip side, Nomura noted that Infosys' guidance allows for further macro weakness at the lower-end and assumes continuation of the current situation at the top-end. "The macro volatility has resulted in increased client caution and elongated decision-making cycles for discretionary projects."

The environment remains uncertain. With changes in the economic outlook, client conversations are increasingly centered around cost take-outs and vendor consolidation, noted the management.

Following the earnings, brokerages rushed to cut their target prices on the IT services giant as the demand environment to remain challenging for the next one–two quarters due to macro uncertainty.

International brokerages CLSA, JP Morgan, HSBC and Bernstein were among the many which trimmed their respective target prices on the Bengaluru-based IT firm.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.