Infosys Q4 Results Review — Top-Line Miss; Cautious Guidance Due To Macro Uncertainty: Dolat Capital

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Dolat Capital Report

Infosys Ltd. reported revenue decline of 3.5% QoQ in constant currency (our estimate of -1.2%) due to reduced third-party sales (~2.3% impact), and lower than expected working days. Operating profit margin dipped by 39 basis points QoQ to 21%, due to net impact of wage hikes (Jr staff), amortization charge (past merger and acquisition), though this decline was partially offset by forex benefit, lower than expected customer support costs and operational efficiencies.

For FY26 the company has provided revenue guidance of 0%-3% in CC terms and OPM band of 20-22%. This guidance accounts for macro uncertainties (tariff-led), while discussions with clients indicate no signs of project delays/ramp-downs & deal pipeline remains healthy.

Noting weak FY26 guidance, we lower our FY26/FY27E earnings estimate by 3%/5%. While Infosys remains cautious on tightening client budgets, it has not yet seen any deal ramp-downs/delays. The sharp correction in stock over past three months have eased valuation towards favorable risk-reward scenario, and hence we revise our rating to ‘Accumulate’ with target price of Rs 1,660, valued at 27 times of FY27E earnings

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