In its latest research, Choice Equity Broking maintains BUY recommendation on technology major Infosys, revising the target price to Rs 1,810—implying a potential upside of 25.7% from current levels. The research report underscores Infosys' impressive Q2FY26 performance, with strong AI momentum, large deal wins, and a disciplined focus on operational resilience. Notably, the momentum in AI adoption and robust deal pipeline are complemented by strategic initiatives in localization and talent, cementing the company's position as a leader in digital transformation. The brokerage highlights sustainable revenue growth, margin stability, and attractive capital returns as key differentiators for investors.

Stellar Q2FY26 Performance Propels Upward Revision in Guidance

Infosys delivered a Q2FY26 revenue of Rs 444.9 billion, up 5.2% QoQ in INR terms, surpassing analyst estimates. The company's EBIT reached Rs 93.5 billion, with EBIT margin advancing 20bps sequentially to 21.0%. The bottom line further strengthened, as PAT soared to Rs 73.6 billion, marking a 6.4% QoQ and 13.2% YoY increase. Robust deal closures, strong realization under Project Maximus, and higher pricing led to this convincing outperformance.

Target Price and Levels: Promising Upside for Investors

The forward P/E of 22x has been retained, applied to the FY27/28E average EPS of Rs 82.2, setting a new target price of Rs 1,810. With the current market price near Rs 1,473, the expected price return stands at 22.8%, combined with a 2.9% dividend yield. This positions investors for a compelling projected upside of 25.7%. The BUY call is further substantiated by an unchanged margin guidance—EBITM expected between 20–22% for FY26—underscoring management's confidence in navigating margin levers.

AI Leadership: Differentiator in a Digital Economy

Infosys continues to assert its domain dominance, having executed over 2,500 GenAI and 200 Agentic AI projects. This has solidified its reputation as the top enterprise AI solutions provider. The company’s vendor-agnostic AI strategy, backed by forward-deployed engineers and localized talent pools, sets the stage for sustained digital transformation in client organizations.

Record Large Deal TCV and Healthy Order Book Signal Growth Visibility

The Q2FY26 order book's Total Contract Value (TCV) reached USD 3.1 billion, of which 67% represented net new deals. A megadeal worth USD 1.6 billion (100% net new) was signed post-quarter, anticipated to ramp up in FY26. While macroeconomic caution lingers, client demand is tilting towards cost optimization and AI-driven automation, fueling Infosys' robust pipeline.

Financials: Margin Expansion and Capital Return Initiatives

Despite compensation headwinds, margin expansion was aided by operational efficiency and currency tailwinds. Free cash generation was exceptional, with FCF reaching USD 1.1 billion—131% of net profits, extending a streak of FCF conversion above 100% for the sixth quarter. Notably, the board sanctioned an interim dividend of Rs 23 and announced a share buyback worth Rs 18,000 crore.

Key Financial Indicators

Operational Metrics: Utilization, Attrition & Regional Dynamics

Utilization rates (ex-trainees) were steady at 85%, and attrition—though slightly elevated at 14.3%—is considered manageable. North America and Europe collectively accounted for nearly 88% of revenue, reflecting geographical resilience. Management's strategy to mitigate H1B visa dependence via localization and nearshoring further enhances delivery capability.

Shareholding Snapshot

Risks and Industry Commentary

Investor optimism should be balanced against potential headwinds. Management acknowledges elongating decision cycles and strict cost controls by clients. Seasonal softness in H2 and cautious IT spending may temper the pace of growth. Nevertheless, Infosys' diversified industry exposure, operational discipline, and AI-driven transformation underpin its long-term competitive advantage.

Bottomline: Infosys Remains a Preferred Play in Indian IT

Leveraging end-to-end AI expertise, resilient margin profiles, and superior cash conversion, Infosys stands out among Indian IT majors. With a track record of exceptional execution, investor-aligned capital policies, and a dynamic global reach, the stock offers attractive risk-adjusted returns. Investors are advised to accumulate the stock with a medium-term perspective, targeting Rs 1,810, in line with a bullish outlook.