Management’s FY26 Guidance Offsets Concerns Over Q4 Weakness in Revenue and Profitability
Infosys Ltd., India’s second-largest IT services exporter, saw its shares rise modestly in early trade on April 21 despite reporting a weaker-than-expected earnings performance for the March quarter of FY25. The upward move in share price was attributed to the company’s resilient forward guidance for the current financial year, which helped temper concerns around slowing revenue growth and margin pressures.
At 11:05 AM on the NSE, Infosys stock traded 1.7% higher at Rs 1,444.1 per share, extending a mild rebound that investors viewed as a forward-looking play rather than a reaction to headline Q4 numbers.
Highlights:
Infosys stock rises 1.7% to Rs 1,444.1 post-Q4 earnings
Q4FY25 net profit down 12% YoY to Rs 7,033 crore
FY26 revenue growth guidance set at 0–3% YoY in constant currency
Brokerages trim target prices amid macro uncertainties
Q4 Earnings Miss Analyst Expectations; Sequential Decline in Constant Currency Revenue
For the January–March 2025 quarter, Infosys posted a 12% YoY drop in net profit to Rs 7,033 crore, though sequentially it rose by 3.3%. Consolidated revenue stood at Rs 40,925 crore, marking a 7.9% YoY increase.
However, on a constant currency basis, revenues fell 3.5% sequentially, underperforming consensus estimates which had forecast a decline of around 1%. On a YoY basis, constant currency revenue growth was 4.2%.
The revenue miss was largely due to a sharp decline in third-party revenue, which accounted for nearly two-thirds of the sequential fall, with the remainder attributed to seasonal volume softness.
Highlights:
Net profit: Rs 7,033 crore, down 12% YoY, up 3.3% QoQ
Revenue: Rs 40,925 crore, up 7.9% YoY
Constant currency revenue down 3.5% QoQ, up 4.2% YoY
Revenue miss driven by weak third-party sales and seasonal volume drops
FY26 Guidance Signals Stability; Market Focus Shifts to Demand Outlook
In an effort to reassure investors, Infosys projected a revenue growth range of 0–3% in constant currency terms for FY2025–26. This guidance was welcomed by the markets as it did not reference any major project ramp-downs, unlike some of its peers.
According to brokerage Motilal Oswal, the upper end of the guidance implies a “stable to marginally improving environment”, and it estimates Infosys could deliver 2% YoY organic growth, possibly outperforming its large-cap peers. A minor contribution of 0.5% from acquisitions is also built into their forecast.
However, global brokerage Nomura struck a cautious note, saying that the lower end of the guidance allows for worsening macro conditions, while the top-end assumes the current weak environment persists without deterioration. The firm flagged ongoing issues such as elongated client decision-making cycles and increased caution on discretionary tech spending.
Highlights:
FY26 revenue guidance: 0–3% YoY in constant currency terms
Motilal Oswal expects 2% organic growth, with 0.5% from acquisitions
Nomura flags increased macro caution, client delays, and slow discretionary spend
Brokers Cut Target Prices Amid Cautious Sectoral Outlook
Despite the short-term positive momentum in Infosys shares, brokerage firms responded by revising down their target prices, citing lingering demand headwinds, soft discretionary spend, and vendor consolidation trends in global IT budgets.
Brokerages including CLSA, JP Morgan, HSBC, and Bernstein have trimmed their targets, suggesting that while the guidance is a relief, the environment remains uncertain for the next 1–2 quarters. Most houses expect continued client budget scrutiny, especially in the face of economic volatility across the US and Europe.
Infosys’ own management acknowledged the challenging landscape, emphasizing client focus on cost optimization and vendor rationalization, particularly across banking, retail, and tech verticals.
Highlights:
CLSA, JP Morgan, HSBC, Bernstein among firms cutting target prices
Demand expected to stay soft for 1–2 quarters due to global economic uncertainty
Clients prioritizing cost take-outs and vendor consolidation
Infosys Shares Underperforming Peers Over 12 Months
Despite the recent bounce in share price, Infosys stock has delivered a muted return of just 1% over the past 12 months, significantly underperforming several peers and broader market indices. Investors remain cautious as the company navigates tepid demand, margin pressure, and competitive pricing dynamics.
The broader IT rally seen on April 21, driven in part by Infosys’ guidance, may offer some support in the near term. However, sustainable upside will depend on deal momentum, recovery in discretionary tech spend, and consistent margin improvement.
Highlights:
Infosys shares up only 1% in the past 12 months
Sector rally may offer near-term support
Long-term upside tied to demand revival and execution
