Nomura Names Infosys Top Pick, Predicts 13% Upside

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AuthorRiya Kapoor|Published at:
Nomura Names Infosys Top Pick, Predicts 13% Upside
Overview

Nomura reiterates a 'Buy' rating on Infosys, designating it their top large-cap India IT services pick. The brokerage forecasts a potential 13% surge to ₹1,810, driven by raised FY26 revenue guidance and strong deal wins. Stable margins around 21% are expected, with growth catalysts including AI services in BFSI and EURS verticals.

Nomura Declares Infosys Top Pick

Nomura has reiterated its 'Buy' call on Infosys, solidifying the IT bellwether's position as its top pick within the large-cap Indian IT services sector. The leading international brokerage anticipates a potential 13% upside for the stock, projecting it could reach ₹1,810 per share. This target remains unchanged, underscoring Nomura's sustained confidence.

Guidance Raised on Strong Outlook

Infosys has elevated its revenue growth guidance for FY26 to a range of 3-3.5% year-on-year, an increase from its previous forecast of 2-3%. This upward revision stems from an expected improvement in the BFSI and Energy, Utilities, Resources, and Services (EURS) verticals in FY27. Nomura highlighted this strategic move and other factors as key drivers for their recommendation.

Deal Wins and AI Focus

Large deal wins for Infosys reached $4.85 billion, with a significant 57% classified as net new. The company is strategically focusing on six value pools within AI services, including AI engineering, data for AI, and AI trust services. Management anticipates revenue growth acceleration in BFSI and EURS in FY27, underpinned by these AI initiatives and strategic partnerships.

Stable Margins Expected

Nomura forecasts Infosys's margins to remain broadly stable, hovering around 21% in FY26. In Q3, the adjusted EBIT margin stood at 21.2%, a 20 basis points quarter-on-quarter increase. Tailwinds from Project Maximus and currency fluctuations were partially offset by furlough expenses. Nomura projects EBIT margins to settle around 20.9% for FY26, within the company's guided band of 20-22%.

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