Kolkata: Infosys, the country’s second biggest IT company has received a solid thumbs up from prominent brokerage Nuvama. Following the Q3FY26 results by the Bangalore-based software company, Nuvama raised the target price of Infosys to Rs 1,900. Moreover, Nuvama has cited “solid deal-win” streak for the company apart from a revenue guidance raise to 3.5%.
The performance of Infosys as reflected in the Q3 numbers was also mirrored in the appreciation of Infosys ADR 10%. Nuvama’s upward revision of the target price from Rs 1,800 to Rs 1,900 came just a day after the announcement of the Q3 results of the IT bellwether. The company’s revenue for Q3 rose 8.9% year-on-year to touch Rs 45,479 crore, while net profit declined 2.2% (also year-on-year) to reach Rs 6,654 crore.
Buy signal
Nuvama assigned the ‘Buy’ rating. “Infosys delivered two consecutive quarters of solid deal wins and growth, which provides high growth visibility for the coming quarters. In FY27, growth will depend on how Q4 turns out – hopefully leaving the company with a better exit-rate than the last two years,” mentioned the brokerage in a report. Incidentally, India’s biggest IT company didn’t have a good quarter.
One of the significant takeaways from the Q3 performance is that its revenue grew 0.6% in constant currency terms compared to the Q2FY quarter. It is important because it comes in spite of a quarter-on-quarter decline of 30 basis points. Revenue from the healthcare vertical — 13% quarter-on-quarter — was one of the drivers of the growth of the company. This was driven by the NHS business. A smaller contribution came from the banking and financial services sector (+2.3% quarter-on-quarter). But manufacturing and retail verticals remained under stress.
Highlights of the growth guidance
The company flagged a possibility of growth in BFSI and Energy in the next financial year. The management highlighted AI and cost optimisation-led demand across E&U and Communications. In the financials an exceptional cost of Rs 1,290 crore was provided for in the December quarter. These originated from changes in the labour laws.
Infosys raised guidance on growth in spite of a decline in the net profit by more than 2% year-on-year in the December period. The decline in net profit was on account of the additional charges due to the labour codes. The Infosys stock price has declined 17.5% in the preceding 12 months.
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