Synopsis: A Bengaluru IT giant wraps up FY26 with double-digit revenue and profit growth, but cautious FY27 guidance keeps the street on edge – even as a top brokerage bets big on an AI-led revival.
Stellar headline numbers, a steady margin, and a landmark AI partnership – yet investors aren’t convinced. The company’s conservative revenue outlook for the year ahead has sparked a sell-off, pushing the stock to its 52-week low. One major brokerage, however, is looking past the near-term gloom and sees as much as 40% upside with a target price of Rs. 1640 from current levels.
The Numbers Look Good – So Why Is the Street Nervous?
Infosys delivered a strong close to FY26. Quarterly revenue rose from ₹40,925 crore in Q4 FY25 to ₹46,402 crore in Q4 FY26 – a jump of over 13% year-on-year. Profit after tax for the quarter climbed from ₹7,038 crore to ₹8,509 crore, with EPS improving from ₹16.93 to ₹20.96. EBIT margin held steady at 24%, a sign of disciplined cost management even as business volumes scaled up.
For the full year, the picture is equally healthy. FY26 revenue came in at ₹1,78,650 crore versus ₹1,62,990 crore in FY25. Full-year PAT rose from ₹26,750 crore to ₹29,474 crore, and annual EPS improved from ₹64.32 to ₹72.59. The EBIT margin held at 24% across both years, reflecting consistent operational execution.
The trouble lies in what comes next. Infosys has guided for FY27 revenue growth of just 1.5% to 3.5% in constant currency terms, with an operating margin band of 20%–22%. That guidance came in at the lower end of what most analysts had pencilled in. In a year already marked by macro uncertainty, geopolitical tensions, and cautious client decision-making, the muted outlook has done little to lift sentiment. Infosys shares have fallen roughly 22% year-to-date in 2026.
The AI Bet: From Pilot to Revenue
The bigger story, according to Nomura, is what is being built under the surface. The brokerage has consistently maintained Infosys as its top large-cap IT pick, and its bullishness centres on the company’s AI transition. Infosys announced a strategic collaboration with OpenAI in April 2026 to scale enterprise AI transformation – a deal that management sees as a key step in moving AI from proof-of-concept to commercial scale. The company’s proprietary Topaz AI platform is expected to be a central enabler as enterprises accelerate digital transformation spends through FY27. Nomura expects these initiatives to shift from pilot phase to revenue-generating scale by FY27.
Sector Recovery Adds to the Bullish Case
Large deal wins for FY26 came in at $14.9 billion, reflecting market share gains in large transformation opportunities. Two verticals – BFSI and EURS (Energy, Utilities, Resources & Services) – have historically been sluggish, but both are now showing renewed momentum through sizable deal closures. A recovery in these verticals would give Infosys a meaningful revenue tailwind through the second half of FY27, adding credibility to the more optimistic end of the guidance range.
Margins Hold – And That Matters
Despite the noise around AI-driven pricing compression, Infosys has held its margin band firmly – EBIT margins stayed at 24% in Q4 FY26, matching the year-ago quarter. Nomura maintained a Buy rating on Infosys, citing consistent margin delivery and progress in GenAI implementation. The brokerage’s last published target of ₹1,810 implies an upside of roughly 58% from current levels. Nomura noted that GenAI projects are maturing without causing revenue headwinds, and that Infosys remains focused on disciplined capital deployment and robust cash flow generation.
About the Company
Infosys Ltd is a Bengaluru-headquartered multinational IT services and consulting company. Founded in 1981, it is India’s second-largest IT firm by revenue. The company serves clients across banking, retail, manufacturing, energy, and technology sectors in over 50 countries, offering digital transformation, cloud, data analytics, and AI services.
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