Infosys faced significant selling pressure from mutual funds in December 2025, with outflows of ₹8,624 crore making it the most sold stock for the month. However, the IT major's recent strong quarterly performance and improved guidance have begun to restore investor confidence, with several brokerages upgrading their outlook on the stock.

Mutual Fund Selling Pressure

According to Prime Database estimates, mutual funds sold ₹8,624 crore worth of Infosys shares during December 2025. The selling was primarily led by major asset management companies:

The selloff followed a 14.00% decline in the stock during 2025, though Infosys has gained around 4.00% in 2026, reflecting a modest recovery in market confidence.

Strong Q3 Performance Beats Estimates

Infosys delivered better-than-expected Q3 results that have improved the investment outlook:

The company also raised its FY26 constant currency revenue growth guidance to 3.00-3.50% from the earlier range of 2.00-3.00%, providing better visibility for the March quarter and strengthening expectations for FY27.

Brokerage Upgrades and Target Price Revisions

Several leading brokerages have responded positively to Infosys's improved performance and outlook:

Motilal Oswal expects FY27 growth to accelerate to over 6.00% year-on-year in organic constant currency terms, representing a sharp improvement from recent quarters. The brokerage noted this as "an early indicator of AI services spends inflection in mid-2026."

Analyst Perspectives on Growth Trajectory

Jefferies analyst Akshat Agarwal provided a balanced view, stating that "Infosys's higher growth guidance of 3.00-3.50% appears to reflect the Q3 beat rather than a better Q4, though management commentary was upbeat." The firm raised estimates by up to 1.00% and expects Infosys to deliver 7.50% recurring earnings-per-share compound annual growth over FY26-28.

Nuvama highlighted the company's deal momentum, noting that "Infosys has delivered two consecutive quarters of solid deal-wins and growth, which provide high growth visibility for coming quarters." The firm expects recent deal momentum to drive growth, aided by generative AI reaching an inflection point.

Market Outlook and Investment Thesis

Axis Securities adopted a more cautious stance, describing the sequential growth trajectory as suggesting "a stable environment rather than an improving one," while still maintaining a buy rating based on 23 times December 2027 earnings.

Motilal Oswal emphasized the shifting risk-reward dynamics, stating that "Infosys is well placed to benefit from enterprise-wide AI spending, given its discretionary-heavy mix." The brokerage believes that at current valuations, upside risks meaningfully outweigh downside risks.

The improved management outlook provides critical visibility for investors assessing whether large-cap IT has found a floor after months of uncertainty. The Q4 growth implied by the new guidance would represent meaningful acceleration from recent quarters, potentially establishing a stronger foundation for FY27 performance.

Infosys received a maintained Hold rating from ICICI Securities with a target price of ₹1,630 following the IT services company's Q3FY26 financial results. The brokerage's assessment comes after the company delivered mixed quarterly performance with revenue beating expectations marginally while margins fell short of estimates.

Q3FY26 Performance Overview

The company's third quarter results showed a nuanced performance against analyst expectations. While Infosys managed to achieve a marginal beat on revenue projections, the margin performance disappointed when excluding a one-off benefit from property sale.

Revised Growth Projections

ICICI Securities has updated its revenue growth forecasts for Infosys, expressing increased confidence in the company's medium-term prospects. The brokerage now models higher growth rates for the upcoming fiscal years, citing two key drivers for improved performance.

Key Growth Drivers

The brokerage identifies strong order book momentum as a primary catalyst for future growth, with the order book expanding 30% YoY in 9MFY25. Additionally, ICICI Securities highlights an uptick in AI-led discretionary demand across multiple industries, with particular strength observed in financial services, energy, resources and utilities sectors.

A notable shift in hiring patterns has emerged, with total headcount growing 4.2% YoY, surpassing the TTM revenue growth of 3.3% YoY in constant currency terms. This represents a marked change from previous quarters where headcount growth lagged behind revenue expansion, indicating improved growth visibility for the company.

Valuation and Target Price

ICICI Securities maintains its target price of ₹1,630 based on a one-year forward price-to-earnings ratio of 21x on December 2027 estimated earnings per share of ₹78.00. The brokerage notes that EPS estimates remain largely unchanged despite the revised revenue growth projections, supporting the continued Hold recommendation for investors.