Infosys Share Price Target at Rs 1,750: Prabhudas Lilladher Suggests ACCUMULATE Call
In its latest research note dated July 24, 2025, Prabhudas Lilladher has reiterated an “ACCUMULATE” call on Infosys Limited, setting a refreshed target price of Rs1,750. Despite formidable macroeconomic headwinds and persistent global uncertainty, Infosys has delivered a robust earnings performance in Q1FY26, outpacing expectations with strong deal wins and visible traction across multiple verticals. Still, the brokerage signals a cautious stance regarding discretionary client spending and anticipates a muted environment in the upcoming quarters.
Research House Recommendation & Valuation Summary
Prabhudas Lilladher recommends an "ACCUMULATE" stance on Infosys with a target price of Rs1,750, against a current market price (CMP) of Rs1,575.
The recommendation is based on the company’s solid Q1FY26 results, robust deal wins, and improved growth guidance amidst ongoing macro uncertainty.
The report values Infosys at 23x FY27E EPS, on the back of an estimated 8.6% earnings CAGR between FY25-FY27E.
Share price has exhibited high volatility, trading between Rs2,007 and Rs1,307 over the last 52 weeks.
Q1FY26 Performance: Outpacing Expectations, But Margin Pressure Visible
Infosys registers 2.6% constant currency (CC) QoQ revenue growth, beating consensus and internal estimates.
Q1FY26 revenue of USD4.9bn (INR423bn), up 3.3% QoQ and 7.5% YoY.
Growth was primarily driven by Energy, Utilities, Resources (9.3% QoQ), Communications (7.1%), Manufacturing (5.8%), and Retail (5.2%).
North America and Europe delivered healthy performances, up 3.4% and 5.5% QoQ, respectively.
EBIT margin compressed by 20bps QoQ to 20.8%, driven mostly by higher sales & marketing and general & administrative expenses, wage hikes, and currency headwinds.
Gross margins actually expanded by 70bps QoQ, reflecting operational efficiency.
Net profit for Q1FY26 was reported at INR69.2bn, slightly above expectations but a marginal 1.6% sequential decline.
Narrowed Guidance: Persistent Prudence Amid Favorable Quarter
Infosys narrows its FY26 revenue growth guidance to 1–3% YoY CC (previously 0–3%) while maintaining margin guidance at 20–22%.
Despite beating on the topline, management remains circumspect about the demand environment, citing a lack of improvement in client sentiment and continued sluggish discretionary IT spend.
Cost takeout and vendor consolidation are the main demand drivers, with minimal contribution from new discretionary projects.
Margins are expected to be supported by reduced passthrough/third-party expenses and lower amortization but could face headwinds in H2FY26 due to increased deal ramp-up and lingering macro weakness.
Deal Wins: Strong Pipeline, Large TCV Boosts Visibility
Large deal total contract value (TCV) reached USD3.8bn in Q1FY26, with over half as net new wins (55%).
28 large deals signed in Q1, including 20 from the U.S., 6 from Europe, and 2 from the Rest of World.
The mega deal within BFSI confirms healthy traction; book-to-bill ratio stands at 0.8x.
Management highlights the company’s agility in leveraging enterprise AI and agentic AI, providing technology-led productivity gains to clients and fostering broader participation in vendor consolidation activity.
Key Financials: Growth and Margin Projections
The report lays out refreshed projections for FY26E and FY27E, highlighting stable growth and improvement in capital returns:
| Metric | FY24 | FY25 | FY26E | FY27E |
|---|---|---|---|---|
| Sales (Rs bn) | 1,537 | 1,630 | 1,734 | 1,889 |
| EBITDA (Rs bn) | 364 | 392 | 418 | 467 |
| EBITDA Margin (%) | 23.7 | 24.1 | 24.1 | 24.7 |
| PAT (Rs bn) | 243 | 267 | 285 | 315 |
| EPS (Rs) | 58.6 | 64.5 | 68.7 | 76.0 |
| RoE (%) | 29.7 | 29.0 | 29.7 | 32.8 |
| Dividend per Share (Rs) | 46.0 | 43.0 | 58.3 | 64.5 |
Management Commentary & Strategic Initiatives
Management underscores a challenging macroeconomic narrative, with cost takeout and consolidation as major demand triggers.
Confidence in margin stability is reinforced by targeted reduction in variable and third-party expenses.
Continued investment in the sales & marketing engine and wage hikes have weighed on EBIT margins, but are seen as necessary long-term commitments.
The leadership remains bullish on enterprise AI and agentic AI services as competitive differentiators, noting the company has been a net beneficiary of the AI adoption curve.
Stock Levels and Shareholdings
52-week High / Low: Rs2,007 / Rs1,307
Market Cap: Rs6,541bn (approx. USD75.7bn)
Promoter Shareholding: 14.86%
Foreign Institutional Investors: 31.92%
Domestic Institutions: 39.60%
Public & Others: 13.62%
Investment Rationale, Risks, and Target Price
The 12-month target for Infosys is set at Rs1,750, implying moderate upside from current levels. Investors are advised to “ACCUMULATE,” taking cognizance of the following factors:
Infosys’ strong brand equity, healthy deal pipeline, and robust capabilities in the AI and digital transformation space.
Margins remain broadly defensible, but a lack of clear improvement in the macro environment and client spending poses downside risks to forecasts.
The risk/reward equation is balanced, as cyclical weakness continues to weigh on sector sentiment.
Downside triggers include further moderation in global IT demand, deteriorating macro conditions, or disruptions in large deal ramp-ups.
Bottomline for Investors: Hold Steady, Emphasize Quality Amid Turbulence
While Infosys faces persistent uncertainty and margin pressures, Prabhudas Lilladher affirms that the underlying fundamentals—solid revenue visibility, strong deal momentum, and strategic focus on productivity-enhancing technology—justify a patient, accumulate stance. For new investors and those holding long-term, the stock offers a prudent bet on the technology sector’s premium player, but one that must be watched vigilantly for evolving macro and sectoral trends.
