Infosys Shares Fall Sharply Ahead Of Q4 Earnings | Should You Buy, Sell Or Hold?

Shares of Infosys Ltd. are falling in trade on Thursday as the Indian IT major gears up to report its March quarter earnings later in the day. The stock is currently trading at Rs 1,251, accounting for a drawdown of around 1.25% compared to Wednesday's closing price of Rs 1,268.

This comes as investors anticipate Infosys' Q4 earnings, as the performance of the IT bellwether could go a long way in shaping the overall sentiment and outlook on the entire IT space.

The IT performance in Q4 so far has been mixed, to say the least. While Tata Consultancy Services impressed with its annualised AI-led revenue, HCLTech and Wipro have been underwhelming.

All eyes will now be on Infosys. Market expects the IT major to report a seasonally soft March quarter, with revenue seen under pressure from fewer working days and furloughs. More than numbers, a bigger focus will be on FY27 revenue guidance and the commentary on AI and the fears of continued AI-led deflation.

Should You Buy Infosys?

We spoke to G Chokkalingam, Founder & MD, Equinomics Research, who has given a 'buy' recommendation on the counter. 

"We are positive and maintain buy recommendation  Pessimistic outlook of IT industry is in its stock price. Around 17 Pe is quite reasonable to buy the stock which still maintains good return ratios and dividend yield of around 3.5%," he said. 

"It's recent initiatives to integrate AI in its platforms should help the company to mitigate the risk. Considering cash and recent changes related to  tax on BUYBACKs an attractive BUYBACK offer from Infy also possible . Q4 performance may not be a disappointing one," he added. 

Here's what analysts are expecting from Q4 results

DAM Capital

• Expects revenue to decline 0.6% quarter-on-quarter in constant currency due to fewer working days and partial productivity pass-through.
• Deal wins expected to be decent but lower than the previous quarter due to absence of mega deals.
• BFSI expected to be the main growth driver.
• Investment in sales and lower volumes may offset benefits from rupee depreciation.

Kotak Institutional Equities

• Forecasts 1% quarter-on-quarter revenue decline due to fewer billing days and seasonal weakness.
• Third-party revenue expected to remain stable.
• Margins expected to stay stable as currency benefits are offset by higher visa costs.
• Other income expected to decline after completion of buyback, limiting profit growth.
• Large deal total contract value expected at $2.5-2.75 billion.
• Expects FY27 growth guidance of 3%-5% including the Versent acquisition and 2.25%-4.25% organically.
• Focus areas include geopolitical impact, AI deflation, client decision-making, large transformation programmes and Project Maximus benefits.

ALSO READ: TCS Q4 Results: Profit In Line, Dividend, AI Momentum And More — Five Key Highlights

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