Infosys Q4 Results Review: Muted FY26 Outlook Seen, But Analysts Remain Bullish

Infosys reported a weak fourth quarter for financial year 2025 and will see a muted fiscal 2026, but both Jefferies and Investec maintain a bullish stance on the stock.

Despite near-term challenges, Infosys is seen as a compelling long-term play with a favourable risk-reward profile. Analysts advise investors to stay patient as demand stabilises and structural growth drivers re-emerge.

The revenue miss was largely driven by a sharper-than-expected decline in pass-through revenues, which contributed to two-thirds of the drop, according to Jefferies. The brokerage added that six out of eight verticals saw quarter-on-quarter revenue declines, with North America and India facing the highest pressure.

Despite the impact of wage hikes, EBIT margins came in at 21%, down 30–40 basis points quarter-on-quarter, but still ahead of estimates due to lower overheads and tax-related gains.

For financial year 2026, Infosys guided for 0–3% constant currency revenue growth, signalling a weak first quarter and ongoing macroeconomic uncertainty. Jefferies views this guidance as cautious, reflecting subdued order inflows and broader sectoral softness. While maintaining a 'Buy' rating, the brokerage cut its target price to Rs 1,660 from Rs 1,700.

Investec, meanwhile, sees potential for a growth rebound after three years of muted tech spending. It cites rising tech debt and the need for enterprises to prepare for AI adoption as structural tailwinds. On this basis, Investec upgraded Infosys to 'Buy' from 'Hold', while revising its target price downward to Rs 1,413 from Rs 1,590.

Jefferies forecasts a 9% EPS CAGR over financial years 2025–2027, while Investec models a modest 0.6% revenue decline in fiscal 2026, factoring in contributions from M&A.

Despite weak topline trends, margin resilience remains a silver lining. Jefferies estimates financial year 2027 EPS in the range of Rs 67–76, implying a fair value between Rs 1,340 and Rs 1,980. Investec expects EBIT margins to improve in fiscal 26, supported by a weaker rupee, improved utilisation, and lower third-party revenue.

Both brokerages remain optimistic about Infosys' medium-term prospects, expecting recovery as market conditions normalise.