Infosys' demand environment remained steady but still marked by macroeconomic volatility, elongated deal cycles, and cautious client spending—especially in discretionary areas. Most client spending was directed toward cost optimization and vendor consolidation rather than new transformation initiatives.
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Systematix Report
For Q2, Infosys Ltd. reported a growth of 2.2% QoQ in CC, 2.7% in USD and 5.2% in INR terms. All markets in North America, Europe, Rest of World (RoW), and India reported QoQ growth, with all verticals except retail strong during the quarter.
Infosys recorded large deal value (TCV – total contract value) of $3.1 billion in Q2 (down 18% QoQ), comprising 23 deals, of which, 67% were net new.
Management has increased the lower end of its revenue growth guidance to 2%-3% in CC for FY26.
During Q2, Ebit margin grew 20bps to 21% on-
a 70bps headwind from sequentially higher post-sales customer support costs, largely offset by
a 60bps tailwind from favorable currency movement, and
a 30bps benefit from Project Maximus, led by increased value-based selling and lean-in automation, partly offset by higher subcontractor expenses and lower onsite utilization.
Management maintained its margin guidance at 20%-22% for FY26.
Valuation & Outlook
At 21.4x 1-year forward multiple, Infosys trades at 1% premium to its last 10-year average multiple. We have maintained our target multiple at 22x FY27E EPS to arrive at a target price of Rs 1,649 per share (Rs 1,644 earlier).
We reiterate Hold, as the stock does not offer much upside from CMP.
Key upside risks to our assumptions: Higher-thanexpected margin expansion and earnings growth.
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