Infosys shares fall 3% as JPMorgan downgrades stock, Jefferies cuts target after Q1 results
Shares of information technology major Infosys declined 2.6% to their day’s low of Rs 1,027 on the BSE on Friday after global brokerages issued bearish
Shares of information technology major Infosys declined 2.6% to their day’s low of Rs 1,027 on the BSE on Friday after global brokerages issued bearish calls on the stock after the company trimmed the upper end of its revenue growth guidance to 1.5%-3% in constant currency, while maintaining its operating margin outlook at 20-22%.The lower revenue guidance indicates limited demand visibility despite strong deal wins and growing AI-led revenue. The IT sector continues to face slower discretionary spending, delayed client decision-making and pressure from AI-driven productivity gains.The company reported a 12% year-on-year (YoY) rise in consolidated net profit to Rs 7,769 crore for the first quarter of FY27, compared with Rs 6,921 crore in the year-ago quarter. Revenue from operations increased 14% YoY to Rs 48,211 crore.Also read: Infosys names Ashiss Kumar Dash to succeed Salil Parekh as CEOInfosys shares: Buy, sell or hold?JPMorgan downgraded Infosys to Neutral with a target price of Rs 1,050, saying the company's Q1 revenue missed expectations sharply and its revenue guidance was cut significantly for the second consecutive quarter following a major miss in Q4. The brokerage said growth momentum has faced multiple setbacks, including weak demand, rising AI-led deflation, sometimes even during ongoing contracts, challenges with the Daimler contract and the termination of an Energy, Utilities, Resources and Services (EURS) contract.
The new organic growth guidance of -0.2% to 1.3%, within an overall growth range of 1.5%-3%, points to a sharp slowdown that would require quarterly sequential growth of 0.4%-1.4% in a difficult environment, it added. While deal signings remain strong, AI-led deflation is keeping revenue conversion subdued, the brokerage further said. Jefferies maintained its Hold recommendation on Infosys but cut the target price to Rs 1,020 from Rs 1,235, citing a worsening growth outlook that is now reflected in the stock price. The brokerage said the appointment of CEO-designate Ashiss Kumar Dash could provide some comfort around the leadership transition. Jefferies cut its estimates by 1%-3% and expects Infosys to deliver a recurring EPS CAGR of 5%.Morgan Stanley maintained its Equal Weight rating on Infosys while cutting its target price to Rs 1,075 from Rs 1,112, implying a potential upside of 4%. The brokerage cited a weaker-than-expected quarter and a sharp reduction in guidance as the key reasons for the revision. While deal wins remained strong, revenue conversion was hurt by subdued discretionary spending. Morgan Stanley expects limited near-term valuation triggers and flat organic growth.Citi maintained its Neutral rating on Infosys but cut the target price to Rs 1,065 from Rs 1,080.
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