Infosys Q4 FY26: Stock Slides as FY27 Guide Misses

Market reaction: shares slide after results

Infosys shares came under pressure on Friday, slipping as much as 3.72% to an intraday low of ₹1,194.50 on the NSE after the company reported its March-quarter numbers and FY27 guidance. The weakness was not limited to India. Infosys ADRs ended 4% lower after the earnings release.

The reaction reflected a familiar pattern in large-cap IT services: headline profit growth was overshadowed by near-term demand visibility and guidance. Brokerages broadly described the quarter as close to expectations, but several flagged that the FY27 revenue growth range was weaker than what the Street was positioned for.

Ahead of the results announcement, Infosys shares had already closed 2.9% lower at ₹1,231.8, highlighting that investor positioning was cautious even before the guidance print. In this backdrop, target price cuts followed across multiple global and domestic brokerages.

Q4 FY26 profit rises 21% YoY, revenue up 2%

For the quarter ended March 31, 2026 (Q4 FY26), Infosys reported a 21% year-on-year rise in consolidated net profit to ₹8,501 crore, compared with ₹7,033 crore in the same period last year. Net profit also beat at least one published estimate in the report set, which pegged the quarter at ₹7,398 crore.

Revenue for the quarter grew 2% year-on-year to ₹46,402 crore, compared with ₹45,479 crore in the year-ago period. Operating income (earnings before interest and taxes, EBIT) increased 3% year-on-year to ₹9,743 crore.

While the P&L showed resilience, the market focus quickly shifted to growth quality, demand commentary, and signs of pipeline conversion, especially after several peers also pointed to a soft discretionary environment.

Margins: steady year-on-year, better sequentially

Infosys reported an operating margin of 21% for the March quarter, unchanged year-on-year. Sequentially, margin improved: one part of the brokerage commentary noted operating margin was higher by 260 basis points compared with the previous quarter. Another data point in the same coverage noted the EBIT margin expanded to 21% from 20.8% in the previous quarter.

The margin delivery mattered because it arrived alongside a cautious demand outlook and a focus on productivity. Brokerages also discussed the role of AI-led efficiency and pricing pressure in changing how clients consume services and how vendors capture value.

Dollar revenue trends and constant-currency growth signal

On the topline, dollar revenue for the quarter was reported at $1,040 million, up 6.6% sequentially but down 1.2% year-on-year. One summary also noted that Infosys’ constant-currency (CC) growth declined by 1.3 percentage points to 3.1%, described as the sharpest decline in four quarters.

These indicators fed into the broader discussion around demand softness, slower client decision-making, and heightened competition. Brokerages also linked this to the ongoing shift toward productivity-led delivery, where some benefits are increasingly passed on to clients.

FY27 guidance: 1.5% to 3.5% CC revenue growth

For FY27, Infosys guided for revenue growth of 1.5% to 3.5% in constant currency, while maintaining an operating margin outlook of 20% to 22%. The article also noted that the new FY27 revenue guidance is lower than an earlier guidance range of 3% to 3.5%.

The guidance range became the key driver of the sell-off and the subsequent target price cuts. Multiple brokerages framed the range as underwhelming, reflecting continued macro uncertainty, client caution, and a lack of meaningful acceleration. Even brokerages that retained positive ratings emphasised that growth may take time to improve.

Deal wins and workforce signals add to caution

Several brokerages highlighted deal and workforce metrics as a concern area. Net new deal wins for Q4 were $1.3 billion, down 19% year-on-year. Jefferies also pointed to a 3% quarter-on-quarter decline in headcount, arguing it aligns with a cautious outlook.

Another brokerage note cited total contract value (TCV) of $1.2 billion, down 33% sequentially. Together, these data points shaped the narrative that pipeline conversion and near-term demand remain constrained, even as the company continues to talk about AI opportunities and productivity.

Brokerages cut targets; ratings remain split

After the results and guidance, brokerages moved in different directions. Some retained Buy ratings but cut targets, while others stayed neutral or hold, highlighting limited upside until growth visibility improves.

Morgan Stanley maintained an Equal-weight rating and cut its target price to ₹1,380 from ₹1,760, while flagging a miss across key metrics and the ramp-down of a large European client weighing on near-term growth. It also noted the impact of AI-led productivity and pricing pressure on competitiveness, and referenced valuation at around 15.8 times price-to-earnings.

Jefferies maintained a Hold rating with a target price of ₹1,235, citing disappointment on guidance, headcount decline, and soft deal wins. Citi retained a Neutral call and cut its target price to ₹1,300, pointing to a weak Q4 performance with misses on revenue and EBIT margin, while trimming FY27-28 earnings estimates by 1% to 2%.

Domestic brokerages remained mixed. Motilal Oswal maintained a Buy rating with targets cited at ₹1,450 in one section and ₹1,425 in another, noting AI-led productivity as a deflationary force and expecting FY27 organic growth around 2.5% (mid-point aligned). HDFC Securities maintained a Buy with a target price of ₹1,550, trimming estimates by around 2% to 3% and noting clients prioritising cost optimisation.

Stock context: underperformance and market capitalisation

Infosys stock has declined 16.3% over the past one year, underperforming the Nifty 50, which is down 0.3% over the same period. Market capitalisation was cited at around ₹515,000 crore.

This performance gap helps explain why guidance prints and deal metrics have outsized impact on near-term sentiment. For many investors, the key question is less about whether margins are stable in one quarter, and more about when revenue growth can sustainably re-accelerate within the guided band.

Key numbers at a glance

Brokerage snapshot: ratings and target prices

What investors will track next

The near-term focus will remain on how Infosys converts its deal pipeline into revenue, especially after the reported declines in net new deal wins and headcount. Investors will also watch for further commentary on pricing pressure and whether AI-led productivity gains are being retained as margin levers or passed through to clients.

For now, the quarter delivered profit growth and stable margins, but the FY27 revenue guidance range of 1.5% to 3.5% has shifted the debate toward visibility and the pace of recovery. The next set of quarterly updates will be important for validating whether the company can track toward the upper end of its guided band while holding margins within the 20% to 22% framework.