Infosys Target Price Raised to Rs 1500 by Choice Institutional Equities

Infosys Posts Stable Quarter, But FY27 Outlook Remains a Concern

Infosys, a leading global consulting and technology services company, has delivered a stable quarter with broadly positive full-year performance. However, the company's guidance for the fiscal year 2027 (FY27) has weighed on the overall outlook.

Record Deal Wins and Revenue Visibility The company's record USD-15 billion deal wins and 24% year-over-year (YoY) total contract value (TCV) growth are genuine positives that underpin revenue visibility for FY27. These achievements demonstrate the company's ability to secure large-scale contracts and drive revenue growth.

Challenges Ahead Despite the positive deal wins, Infosys faces several challenges that may cap near-term revenue growth. The company's flat volume trends, limited clarity on AI-related deflation, and a 75-100 bps impact from a European manufacturing client are expected to exert pressure on revenue growth. Additionally, onsite mix pressures are likely to limit revenue growth to around 3.5% unless macro conditions improve.

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Guidance and Outlook While narrowing down the guidance range signals confidence, the FY27 midpoint of 2.5% constant currency (CC) growth suggests only a modest improvement over FY26's underlying growth. Factoring in the muted outlook, we forecast Revenue/EBIT/PAT to grow at a compound annual growth rate (CAGR) of 9.3%/9.9%/8.0% over FY26-FY29E.

Recommendation Based on our analysis, we reiterate our BUY rating for Infosys, revising our target price to INR 1,500 (from INR 1,650) based on FY28E EPS of INR 83.