Infosys Shares Rise As CLSA Upgrades It To 'Outperform'

Shares of Infosys Ltd. rose on Monday after CLSA upgraded it to an 'outperform' rating from 'hold', with a target price of Rs 1,978. The stock is well-positioned to benefit from both short-term cyclical tailwinds and longer-term structural growth drivers, despite short-term challenges, the brokerage said.

A key factor behind the upgrade is the revival of discretionary demand across key verticals and geographies. Infosys is poised to capitalise on growth in areas such as SaaS implementations, including SAP S/4HANA and Salesforce, as well as the Nvidia ecosystem. The democratisation of AI also presents significant opportunities for the company in the medium to long run, the brokerage said in its report.

While the fourth quarter may see weak sequential growth due to wage hikes and margin pressures, CLSA views these challenges as already priced in. Infosys’ long-term growth potential remains intact, particularly with improving client sentiment around tech spending and strong large deal wins, the brokerage said.

Recent global tariff uncertainties could lead to wider revenue growth guidance for financial year 2026, with CLSA forecasting a range of 4-7%. Despite this, Infosys is well-positioned to capitalise on cost optimisation and transformation deals, especially in the EU and auto sectors, where tariff-related headwinds may lead to vendor consolidation and mega deal opportunities.

Infosys is trading at a seven-year average P/E multiple of 24 times, which CLSA finds attractive given the improving revenue growth trajectory.

Shares of Infosys rose as much as 1.39% to Rs 1,709.45 apiece, the highest level since March 6. They pared gains to trade 1.11% higher at Rs 1,704.65 apiece, as of 10:36 a.m. This compares to a 0.32% advance in the NSE Nifty 50.

The stock has risen 6.90% in the last 12 months and fallen 9.11% year-to-date. Relative strength index was at 37.

Out of 47 analysts tracking the company, 36 maintain a 'buy' rating, six recommend a 'hold' and five suggest 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies an upside of 23.1%.