Infosys Q4 FY26: Profit up 27.8%, stock slips

What triggered the fall in Infosys shares

Infosys Ltd shares fell sharply on Friday after the company reported Q4 FY26 results and issued a subdued growth outlook. The stock dropped 3.1% in early trade to become the top Nifty loser. Selling pressure continued through the morning, with the stock falling as much as 5%.

The reaction in US trading had already signalled weakness. Infosys’ ADR declined 4.01% overnight following the results announcement. That move pointed to a weak opening for the stock in India.

Price check: early trade versus late morning

At around 9:16 am, Infosys was trading at ₹1,202.6 on the NSE, versus the previous close of ₹1,231.8. By 10:55 am, the stock was quoted at about ₹1,179.2, still against the same previous close. The intraday slide placed Infosys among the biggest drags on the index.

The move was notable because the company’s quarterly profit performance was strong. But the market focus remained on growth visibility and guidance.

Q4 FY26 results: profit jumps, revenue growth stays modest

Infosys reported a strong January to March quarter on the bottom line. Net profit rose 27.8% quarter-on-quarter to ₹8,501 crore. The company’s profit was aided by margin expansion and a lower tax outgo.

However, revenue growth remained modest. Revenue rose 2% sequentially, which reinforced the view that demand conditions remain uncertain.

FY27 guidance: narrow upside and demand uncertainty

The key number that shaped sentiment was FY27 guidance. Infosys guided for 1.5-3.5% constant currency growth for FY27. The guidance indicated continued uncertainty around demand and decision-making.

Brokerages highlighted the growth outlook as the main concern, even as they noted the strength in the quarterly profit line.

Brokerage views: Citi, Jefferies stay cautious

Citi maintained a ‘neutral’ rating and cut its target price to ₹1,300. It cited revenue and margin miss, along with slower decision-making and rising competition.

Jefferies retained a ‘hold’ rating and set a target price of ₹1,235. It flagged weak guidance, lower deal wins, and headcount decline as factors that could weigh on growth.

Motilal Oswal flags AI deflation and lower TCV

Motilal Oswal pointed to a tough outlook for the company and the sector. It highlighted AI-led deflationary pressures as a key factor. It also noted a 33% sequential decline in total contract value (TCV), which added to concerns on near-term growth momentum.

Some optimism remains: Nomura and HSBC keep ‘buy’

Not all commentary turned negative. Nomura and HSBC retained ‘buy’ ratings. They pointed to stable margins and an expected recovery driven by deal wins and AI partnerships.

They also highlighted potential upside if growth trends move toward the upper end of the guidance band. The stance suggests that while visibility is limited, some brokerages still see room for improvement if execution and demand stabilise.

Sector backdrop: IT sentiment already fragile

The broader IT sector has been under pressure amid cautious outlooks and renewed AI-related concerns. In one of the recent sharp moves, the Nifty IT index tumbled as much as 1,228.35 points, or 3.87%, to 30,500.75 versus the previous close of 31,729.10.

HCLTech was cited as the biggest drag in that sell-off, down 10%, while Infosys was down nearly 4% in that session. The environment has kept investors sensitive to guidance and commentary across IT earnings.

One-year performance and market capitalisation

Infosys stock has declined 16.3% over the past one year. Over the same period, the Nifty 50 has declined 0.3%. The company’s market capitalisation is about ₹5.15 lakh crore, underscoring its heavyweight status and the impact of sharp price moves on index performance.

Key numbers at a glance

Why the guidance mattered more than the profit beat

The market reaction showed that investors were willing to look past a strong quarter-on-quarter profit rise. The modest sequential revenue growth and the FY27 constant currency guidance range became the central inputs for valuation and sentiment.

With multiple brokerages pointing to slower decision-making, competition, lower deal wins, and headcount decline, the near-term focus has shifted to demand visibility rather than just margins. AI-led deflationary pressures and weaker contract metrics like TCV, as flagged in brokerage commentary, also added to caution.

Conclusion

Infosys delivered a sharp sequential rise in net profit to ₹8,501 crore in Q4 FY26, supported by margin expansion and lower tax outgo. But the stock fell as investors weighed modest 2% sequential revenue growth and FY27 guidance of 1.5-3.5% constant currency growth. With opinions split between cautious and constructive brokerages, the next key driver for the stock remains management commentary and evidence of improved demand and deal momentum within the guided band.