Infosys Share Price Target Raised! Here’s Why Analysts Say It’s Time To Buy & Hold

Bengaluru-based IT major Infosys has received a vote of confidence from brokerage firm Emkay Global Financial Services, which has maintained its ‘BUY’ rating on the stock and set a target price of Rs 1,750. This implies an upside from the current market price (CMP) of Rs 1,575.

Emkay’s optimism is underpinned by Infosys’ broad-based Q1FY26 revenue growth, strong deal wins, and increasing traction in AI-led offerings despite lingering macroeconomic headwinds.

Infosys Q1 Results FY26

According to Emkay, Infosys delivered a broadly in-line operating performance in Q1FY26. Revenue grew 2.6% QoQ in constant currency (CC) and 4.5% QoQ in USD terms to $4.94 billion, surpassing Emkay’s estimate of $4.90 billion. This growth was largely driven by realization gains from Project Maximus and a ~40bps contribution from M&A activities.
However, EBIT margin (EBITM) declined by 20bps QoQ to 20.8%, slightly below expectations. The margin dip was attributed to:

Wage hikes and higher variable payouts (-100bps)
Adverse currency movement (-30bps)
Increased sales & marketing (S&M) investments (-20bps)

These headwinds were partially offset by:
Project Maximus-led realization gains (+70bps)
Lower amortization costs (+40bps)
Reduced third-party expenses (+20bps)

Despite the decline, Infosys has retained its FY26 EBITM guidance of 20–22%, aspiring to improve margins on a YoY basis.

Large Deals, AI Momentum Drive Positive Sentiment
Infosys secured 28 large deals in Q1, with a total contract value (TCV) of $3.8 billion, of which 55% is net new. Notably, this included:
Over $1 billion in vendor consolidation deals
A mega deal with a top global bank

Segment-wise, nine deals were signed in Communications, six in EURS, five in Manufacturing, four in BFSI, and two each in Retail and Hi-Tech.
“Enterprise AI adoption was one of the key growth drivers in the quarter,” Emkay noted. Infosys continues to leverage its Topaz AI platform, having developed over 300 AI agents to aid clients in decision-making, customer experience, and operational efficiency. The company reported AI-driven productivity gains of 5–15% across various client programs.

Additionally, Infosys is now the preferred AI partner for 10 of the Top 20 BFSI clients, with many AI initiatives transitioning from proof-of-concept (PoC) to full-scale production.

Verticals: BFSI, Retail, EURS, and Communications Lead
Most verticals delivered sequential growth, with the exception of Hi-Tech (-1.8%) and Life Sciences (0.1%). The performers included:
BFSI: +2.6% QoQ
Retail: +5.2%
EURS: +9.3%
Communications: +7.1%
Manufacturing: +5.8%

The Communications vertical, however, continues to face challenges amid macro volatility, cost pressures, and client caution on capex. Still, previously won deals helped maintain momentum.

Infosys highlighted a large GCC setup deal win in the Manufacturing vertical despite sluggish demand from auto and industrial sectors in Europe.

Guidance Outlook: Narrowed Revenue Band for FY26
Reflecting on the macro uncertainties and Q1 performance, Infosys narrowed its FY26 revenue growth guidance to 1–3% CC from an earlier 0–3% range. This suggests a CQGR (compound quarterly growth rate) of -0.3% to 1%.

“Revenue growth guidance assumes stability in the macro environment at the upper end, while the lower end factors in risks of heightened uncertainties and deterioration in the macro environment,” Emkay said.

Infosys expects H1FY26 to be stronger than H2FY26, with performance hinging on macro stability, client spending cycles, and deal conversion timelines.

Earnings Call Key Takeaways:
Client Sentiment: No visible signs of macro improvement; cautious discretionary spending continues.
AI Investments: Strong traction, especially in BFSI, with use cases across KYC, onboarding, and portfolio management.

Vertical Commentary:
Retail clients are impacted by tariff-related uncertainty, procurement disruptions, and tight budgets.
Hi-Tech continues to face pressure from macro and geopolitical risks.
EURS outlook remains mixed, though the pipeline remains healthy.
Communications clients are focused on cost optimization and vendor consolidation.
Manufacturing clients are re-evaluating supply chains in light of global tariffs.

Headcount, Attrition, and Margins
Headcount stood at 323,788, flat on a QoQ basis. LTM attrition marginally increased to 14.4% from 14.1% in the previous quarter. Infosys has implemented wage hikes in two phases (Jan 2025 and April 2025).

Savings from Project Maximus, lower third-party costs, and operational efficiencies are expected to support margin expansion in upcoming quarters. However, transition costs from mega deals could be partial offsetting factors.

Valuation & EPS Outlook
Emkay has retained its FY26–28E EPS estimates, factoring in Q1 performance and current deal momentum. The target price of ₹1,750 is based on 23x Jun-27E EPS, underlining confidence in Infosys’ structural growth levers and operational resilien

A Steady Ship in Uncertain Waters
Infosys’ performance in Q1FY26, marked by strong large deal wins, steady revenue growth, and disciplined margin management, has reinforced investor confidence amid global uncertainties. With an intensified focus on AI, vendor consolidation, and cost optimization, Infosys remains well-positioned to navigate a challenging macroeconomic environment—earning a reaffirmed BUY rating from Emkay with a revised share price target of Rs 1,750.

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