Infosys Q4 results bring earnings, share price target cuts; should you buy, hold or sell stock?

Infosys Ltd reported a muted FY25 guidance but its March quarter deal wins came in much higher than analyst etimates of $2-3 million. Its dollar revenue at $4,564 million was below Street expectations but margin was largely in line. This is because the headline numbers were hit by 100 basis points one-time headwind from renegotiation of a BFSI contract. Infosys Q4 results were a miss in that context, but not by a big margin.

This could be one reason why Infosys ADRs which fell about 8 per cent overnight eventually ended 2.6 per cent lower at $16.51, and slipped only marginally in the after hours traded on NYSE. Analysts have lowered their earnings and stock price targets to factor in the guidance. A few brokerages have ‘Accumulate’ or ‘Buy’ ratings on the stock.

Motilal Oswal said Infosys’ FY25 revenue growth guidance came in significantly below its estimate, although deal wins should support the medium-term growth outlook. Infosys has maintained its margin guidance but continues to see upside potential in the medium term, which the brokerage sees as encouraging.

This brokerage is expecting FY25 revenue growth to be near the upper band of the guidance, at 2.5 per cent YoY CC.

“Despite near-term weakness, we expect Infosys to be a key beneficiary of the acceleration in IT spending in the medium term. Based on our revised estimates, the stock is currently trading at 19x FY26E EPS. We value the stock at 22x FY26E EPS, implying a target of Rs 1,650,” it said.

Kotak Institutional Equities said the muted growth in FY2024-25E is not driven by structural factors but due to higher exposure to impacted segments. A strength in digital capabilities, good track record on large and mega deals and robust account management would drive healthy growth once discretionary spending environment improves, it said.

This brokerage has cut its FY2025-26E EPS by 2-3 per cent and retained ‘Buy’ on the Infosys stock with new fair value of Rs 1,750 from Rs 1,790 earlier, valuing the stock at 24 times Jun 2026E EPS.

“We reiterate ‘Accumulate’ on Infosys, with a lowered target price (TP) of Rs 1,512, valuing it on March’26E EPS with a lowered multiple at 20.1x. We have increased discount from 10 per cent to 15 per cent to the target PE multiple accorded to TCS. The higher discount is for the weaker revenue growth due to the higher discretionary nature of Infosys’ revenue vs TCS,” Nirmal Bang said.

Nuvama said Infosys’s growth my pick up as discretionary spends revive in H2FY25 – till then the stock may remain sideways and underperform peers such as TCS.

“The stock has corrected sharply recently and is now trading at attractive valuations of 19x FY26 PE,” it said while suggesting a lower target of Rs 1,720 from Rs 1,850 earlier.