Infosys shares jumped 5.07% to ₹1,680.90 in morning trade following the company's decision to raise its FY26 revenue growth guidance and report strong deal wins in the December quarter. The IT services giant's performance has sparked renewed investor confidence, with the stock trading on healthy volumes and brokerages setting higher target prices.

Financial Performance and Guidance Revision

The company upgraded its full-year constant currency revenue growth guidance to 3-3.5% from the earlier 2-3%, signalling improved business momentum. This upward revision came after strong Q3 performance:

Strong Deal Momentum and AI Leadership

Infosys secured large deals worth $4.80 billion during the quarter, including a significant $1.60 billion contract with NHS UK. The company is currently working on 4,600 AI projects across 90% of its top 200 clients, with management indicating that clients increasingly view Infosys as their preferred AI partner.

Enhanced Brokerage Targets and Outlook

JM Financial: Buy Rating with ₹1,930 Target

JM Financial maintained its Buy rating with a target price of ₹1,930, highlighting that FY27 growth is expected to accelerate driven by large deal ramp-ups and pickup in discretionary spending in BFSI and Energy & Utilities sectors.

Choice Equity Broking: Revised Target to ₹1,865

Choice Equity Broking revised its target to ₹1,865, citing strong large deal momentum and positive outlook for the company's growth trajectory.

Motilal Oswal: Bullish Target of ₹2,200

Motilal Oswal set an ambitious target of ₹2,200, noting early signals of AI services inflection and the company's strong positioning in artificial intelligence adoption.

Operational Metrics and Workforce Expansion

The company demonstrated confidence in demand recovery through significant workforce expansion:

Market Performance and Trading Activity

The stock traded with healthy volumes of 89.10 lakh shares, with 64.90% sell orders against 35.10% buy orders. Despite being down 12.96% over the past year, the stock has gained 2.99% year-to-date, reflecting improving investor sentiment.

Profitability was impacted by a one-time labor code provision of ₹1,289 crore, which affected reported operating margins. However, adjusted operating margins stood at 21.20%, up 20 basis points sequentially, supported by currency tailwinds and Project Maximus initiatives. Management expressed particular confidence in BFSI and Energy, Utilities sectors for FY27, indicating sustained momentum in key verticals.

Infosys Ltd is positioned for strong market performance after upgrading its revenue guidance and receiving positive analyst coverage, with American Depositary Receipts surging 10% overnight following the announcement.

Guidance Upgrade Drives Optimism

The IT services major lifted its constant-currency revenue growth guidance for FY26 to 3-3.5%, representing an upward revision from the earlier 2-3% band. This guidance upgrade signals improved demand conditions despite the challenging environment facing large-cap Indian IT services companies, which continue to grapple with cautious client spending and slower decision-making cycles.

Mixed Q3 Financial Performance

The guidance upgrade came alongside mixed quarterly results for the December quarter. While revenue growth remained robust, profitability faced pressure during the period.

Despite the decline in consolidated net profit, revenue growth in both rupee and dollar terms exceeded consensus estimates, demonstrating the company's resilience in execution.

Brokerage Recommendations and Target Prices

Multiple brokerages have responded positively to Infosys' performance and guidance revision, with target prices ranging from ₹1,750.00 to ₹2,076.00.

Centrum maintains the most bullish outlook, citing sustained traction in verticals such as BFSI and rising adoption of AI-led services. The brokerage views the guidance upgrade as reflecting management confidence in the demand environment, supported by strong deal pipeline and large deal wins.

Jefferies believes the upgraded guidance largely reflects Q3 outperformance rather than Q4 demand improvement. The brokerage has raised revenue estimates by up to 1% and expects Infosys to deliver a 7.50% recurring EPS CAGR over FY26-28.

Nomura continues positioning Infosys as its top large-cap pick in Indian IT services, noting steady demand support despite margins coming in marginally below expectations.

Growth Drivers and Market Position

Several factors are supporting the positive outlook for Infosys:

• Sector Performance: Q3 growth was led by Life Sciences, BFSI, and Manufacturing verticals
• Geographic Strength: Europe stood out as a key growth region
• Deal Momentum: Strong large-deal momentum including multiple mega deals
• AI Focus: Management's emphasis on six AI-led value pools as long-term growth drivers
• Market Share Gains: Ability to capture market share despite near-term segment volatility

Market Context

Infosys shares closed at ₹1,609.00 on the NSE, down 0.60% from the previous close. The stock has declined sharply over the past year, leading to normalized valuations closer to long-term averages. Indian stock markets remained closed for trading due to Maharashtra municipal elections, setting up potential strong buying interest when trading resumes.

The improved guidance stands out against the challenging backdrop facing the IT services sector, where companies continue dealing with regulatory and wage-related cost pressures alongside cautious client spending patterns.