Infosys falls 2% even after Q2 beat; stock falls for 5th day; time to sell?

Infosys shares fell even after it raised the lower end of its annual revenue guidance

Shares of Infosys dropped nearly 2 per cent on Friday, even as second-quarter profit and revenue beat estimates, as analysts noted that the IT major is "still not out of the woods."

 

The IT firm's stock fell as much as 1.7 per cent during the day to ₹1,446.1 per share, the biggest intraday fall since September 26 this year. The stock pared losses to trade 1.5 per cent lower at ₹1,447 apiece, compared to a 0.06 per cent advance in Nifty 50 as of 9:49 AM. 

 

Shares of the company fell for the fifth straight session, down 4.7 per cent in the process. The counter has fallen 23 per cent this year, compared to an 8.3 per cent advance in the benchmark Nifty 50. Infosys has a total market capitalisation of ₹6 trillion. 

Infosys Q2 results 

Infosys reported a 13.2 per cent year-on-year (Y-o-Y) rise in second-quarter net profit to ₹7,364 crore, buoyed by a robust large-deal pipeline and broad-based growth across verticals.

 

Revenue for the three months to September rose 8.6 per cent Y-o-Y to ₹44,490 crore, led by financial services and manufacturing. Both profit and revenue surpassed Bloomberg consensus estimates, marking two consecutive quarters of steady growth for the Bengaluru-based company.

 

The total contract value of large deals signed in the quarter reached $3.1 billion, up 29 per cent year-on-year. Financial services and manufacturing grew 5.4 per cent and 6.6 per cent respectively, while retail declined 2.3 per cent. 

Infosys raises revenue guidance

India’s second-largest information technology (IT) services company now expects revenue to grow between 2 and 3 per cent in constant currency for the financial year ending March 2026, compared with 1 to 3 per cent previously.

 

“The environment continues to remain uncertain,” said Salil Parekh, chief executive officer and managing director of Infosys. “While the second half of the year is usually slower than the first, we see good traction in large deals and have thus increased the guidance. We are more confident about the lower end of our outlook.” 

Analysts on Infosys earnings

Motilal Oswal said the IT major is still not out of the woods. It said that Infosys' upgraded revenue guidance continues to imply a slow second half. The company missed estimates on both revenue and margins, even as second-quarter growth was decent in a seasonally strong period.

 

While Infosys raised the lower end of its revenue guidance, it retained the upper band, reflecting ongoing macro uncertainty and a slower-than-expected recovery in discretionary spending. The brokerage reiterated its 'Neutral' rating on Infosys with a target price of ₹1,650 per share.  

 

Meanwhile, Nomura reiterated Infosys as its top pick in the large-cap India IT space. The brokerage expects the company to post 4.1 per cent Y-o-Y growth in dollar revenue in FY26, including around 40 basis points from acquisitions (excluding the Versent deal). Nomura maintained its 'Buy' rating on Infosys with a target price of ₹1,720 (earlier ₹1,730).