Infosys, India's second-largest IT services firm, reported its Q2FY26 earnings on Thursday, October 16, 2025, revealing a mixed bag of results that have left investors and analysts contemplating their next move. While the company's profit and revenue surpassed estimates, the stock experienced a nearly 2% dip, prompting questions about whether to buy, sell, or hold.

Q2 Results: A Detailed Look

For the second quarter of FY26, Infosys reported a consolidated net profit of ₹7,364 crore, a 13% increase compared to the previous year. This figure exceeded the street estimate of ₹7,221 crore. The company's revenue also saw a substantial rise, climbing 9% year-on-year to ₹44,490 crore, surpassing analysts' expectations of ₹44,008 crore.

Other key highlights from the Q2 results include:

• Revenue growth: A 5.2% increase to ₹44,490 crore.
• EBIT: A 6% rise to ₹9,353 crore, slightly above the estimated ₹9,338 crore.
• EBIT margin: Stood at 21%, a marginal increase from the previous quarter.
• Interim Dividend: The company declared an interim dividend of ₹23 per share, with October 27 set as the record date and November 7, 2025, as the payout date.
• Large Deal TCV: Total contract value of large deal wins was $3.1 billion, with 67% being net new deals.

Revised Guidance and Strategic Moves

Encouraged by its performance, Infosys has revised its FY26 revenue growth guidance, raising the lower end to 2-3% from the previous 1-3%. The company has maintained its margin outlook at 20-22% for the fiscal year.

In addition to the financial results, Infosys announced strategic initiatives, including the incorporation of a wholly-owned subsidiary in Egypt and the transfer of its shareholding in Infosys Consulting S.R.L., Argentina, to Infosys Nova Holdings LLC.

Market Reaction and Analyst Sentiment

Despite the positive results, Infosys shares fell nearly 2%. This decline could be attributed to various factors, including broader market trends or concerns about future growth prospects. The initial impact was also seen on the company's American Depository Receipt (ADR), which declined 2.25%.

Analysts' opinions on Infosys' stock are divided:

• Positive Outlook: Some brokerages maintain a positive stance, citing strong deal traction and raising target prices. JP Morgan, for instance, has an Overweight rating and lifted its target to ₹2,000.
• Cautious View: Other analysts are more cautious, pointing to a potentially soft second half of the fiscal year and suggesting a cut in target prices. Jefferies, while maintaining a Buy rating, cut its target to ₹1,700.
• Technical Analysis: Technical analysis indicates that the stock is trading below its long-term moving averages, suggesting a broader downtrend. However, strong support is expected around ₹1,348.

The Verdict: Buy, Sell, or Hold?

Given the mixed signals, deciding on a course of action requires careful consideration:

• Buy: Investors with a long-term perspective and confidence in Infosys' growth potential may consider buying the stock, especially if they believe the recent dip is a temporary setback. The company's strong deal wins, focus on AI, and consistent dividend payouts could be attractive factors.
• Sell: Investors concerned about the company's future growth prospects, potential margin pressures, or broader market uncertainties may consider selling. Technical indicators also point to a downtrend, suggesting further downside risk.
• Hold: Investors who are uncertain about the company's near-term performance may opt to hold their existing positions. This approach allows them to monitor the company's progress and make a more informed decision in the future.

Ultimately, the decision to buy, sell, or hold Infosys stock depends on individual investment goals, risk tolerance, and market outlook.