Analysts stay bullish on Infosys after steady Q1 show; Should you buy in?

Backed by large deals, Infosys raised the lower end of its guidance to 1 per cent from nil growth it had guided a quarter earlier. Analysts reiterated their bullish calls

Infosys Ltd. retained bullish calls from several brokerages after the information technology (IT) major posted better-than-expected earnings for the first quarter of the current financial year (Q1FY26).

 

As the tech firm only raised the lower end of its revenue guidance, analysts said that this reflects heightened global uncertainties. 

  The net profit of Bengaluru-based company came in at ₹6,921 crore, marking a sequential decline of 1.6 per cent. The top line grew 3.3 per cent on quarter-on-quarter (Q-o-Q) to ₹42,279 crore. Both the numbers beat Bloomberg estimates, where analysts had estimated a net profit of ₹6,778 crore and revenue of ₹41,724 crore.

 

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The second-largest software-services provider raised the lower end of its guidance to 1 per cent from nil growth it had guided a quarter earlier. A quarter of strong deal wins worth $3.8 billion helped the company raise the guidance at the lower end, Chief Financial Officer Jayesh Sanghrajka said.

 

For the IT giant, financial services and manufacturing, which contributed 28 per cent and 16 per cent to the top line, respectively, were up 5.6 per cent and 12.2 per cent. Growth in manufacturing was a contrast at a time when other companies have seen their revenue hammered due to tariff fears. 

Analysts on Infosys Q1 results 

Infosys reported decent Q1 results, with revenue in constant currency (CC) terms significantly ahead of estimates, Nuvama Institutional Equities said. Infosys delivered solid growth, both in magnitude and quality, supported by a reduction in third-party revenue, the brokerage said. While the guidance upgrade was modest, it appears reasonable in light of prevailing macro uncertainties.

 

Nuvama retained their 'Buy' rating with a revised target price of ₹1,850 per share from ₹1,700 apiece earlier.

 

The operating environment remains challenging for Infosys across several verticals, particularly where discretionary spending is under scrutiny, analysts at Centrum Broking said. Segments such as communications, high-tech, and retail continue to witness cautious IT budgets, while financial services and energy offer opportunities, it said.  

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  Despite macro headwinds, Infosys' hiring plans for FY26 remain intact, indicating management’s confidence in deal conversions and execution capabilities, according to Centrum Broking. The 'Buy' rating was maintained with a revised target price of ₹1,942 apiece. 

 

The company narrowed its FY26 revenue growth guidance, reflecting its Q1 performance, robust large deal wins, M&A contribution, and prevailing macroeconomic uncertainty, analysts at Emkay Global said. It expects the first half of the year to outperform the second half. 

 

The upper end of the guidance assumes macro stability, while the lower end factors in risks from further deterioration in the external environment, Emkay said. The brokerage maintained FY26-28 earnings estimates and reiterated their 'Buy' rating with a target price of ₹1,750 per share.