Whalesbook
Infosys shares climbed nearly 4% in early trading on Friday after the IT services giant announced robust third-quarter results and revised its revenue outlook upwards for the current fiscal year. The market has responded positively to the company's updated FY26 revenue guidance of 3-3.5%.
Guidance Upgrade Fuels Investor Interest
The upward revision in revenue guidance emerged as the primary catalyst for renewed investor enthusiasm. Infosys highlighted substantial deal momentum, securing total contract value of approximately $4.8-4.9 billion in the quarter, with nearly 57% originating from new clients. Management indicated that these wins, coupled with artificial intelligence partnerships, are poised to bolster growth across sectors including banking, financial services, energy, utilities, and resources.
Brokerage Upside Sees AI as Key Driver
Several brokerages reiterated 'Buy' ratings, with Motilal Oswal Financial Services setting an ambitious target price of ₹2,200, implying a potential 38% rally. The brokerage views the guidance upgrade as an early indicator of accelerated spending on AI services, anticipated from mid-2026. Motilal Oswal expects improved revenue growth in FY27, supported by a recovery in discretionary spending and strong performance from a large UK National Health Service contract.
Nomura maintained its 'Buy' rating with a target of ₹1,810, suggesting a 13% upside. The firm noted the guidance upgrade signals improved growth visibility amidst macro uncertainties, supported by large deal wins totaling around $4.85 billion and a growing share of net new deals. Nomura also pointed to management's commentary on six AI opportunity areas.
Nuvama Institutional Equities reiterated its 'Buy' call and raised its target price to ₹1,900 from ₹1,800, indicating over 18% potential upside. The brokerage cited better-than-expected Q3 revenue growth and an operating margin of 21.2%, in line with estimates. Nuvama also highlighted the company's hiring of approximately 13,500 employees in the first nine months of FY26 as preparation for future demand.
Financial Snapshot
Infosys reported a net profit of ₹6,654 crore for Q3 FY26, a 9.6% decrease from ₹7,364 crore in the previous quarter. However, revenue saw a sequential increase of 2.2% to ₹45,479 crore from ₹44,490 crore. Operating profit before interest and tax grew 1.3% quarter-on-quarter to ₹9,479 crore. The operating margin slightly dipped to 20.8% from 21% in the prior quarter due to increased costs.
The company raised its FY26 constant currency revenue growth guidance to 3.0-3.5%, up from 2-3%, while maintaining its operating margin guidance at 20-22%.