Infosys, India's second-largest IT services exporter, has announced its Q1 FY26 results, delivering a steady performance and prompting discussions among analysts about whether to buy, sell, or hold the stock. The company reported a 9% year-on-year rise in net profit, reaching ₹6,921 crore for the quarter ended June 2025, compared to ₹6,368 crore in the corresponding period last year. Revenue from operations also saw a significant increase of 7.5%, climbing to ₹42,279 crore.

Key Highlights of Q1 FY26 Results

• Profit and Revenue Growth: Infosys demonstrated a solid start to the fiscal year, with both net profit and revenue showing substantial year-on-year growth.
• Revised Guidance: The company has revised its FY26 constant currency revenue growth guidance, raising the lower end to 1% while maintaining the upper end at 3%. This indicates increased confidence driven by recent large deal wins and a stabilizing demand environment across key sectors.
• Deal Wins: Infosys reported strong deal wins with a total contract value (TCV) of $3.8 billion, with 55% representing net new deals. This reflects the company's competitive positioning and strong client relationships.
• Operating Margin: The operating margin for the quarter stood at 20.8%, a slight decrease of 0.3% year-on-year and 0.2% quarter-on-quarter. The company expects the operating margin to remain between 20-22% for the rest of FY26.
• AI Capabilities: Infosys emphasized its focus on enterprise AI capabilities as a key driver of its performance. CEO Salil Parekh noted the increasing demand for AI agents and their deployment across various client operations.

Factors Influencing the Guidance Revision

The upward revision of the lower end of the revenue growth guidance reflects a more optimistic outlook based on several factors:

• Strong Q1 Performance: The robust performance in the first quarter provided a solid foundation for the rest of the year.
• Large Deal Wins: Recent large deal wins have boosted management's confidence in future revenue streams.
• Stabilizing Demand: There are signs of stabilization in demand across key verticals such as BFSI (Banking, Financial Services and Insurance), retail, and manufacturing.
• Acquisition Contributions: CEO Salil Parekh said that acquisitions contributed a 40 basis points impact to the company's Q1 constant currency growth of 2.6 percent and will have a similar effect on the full-year guidance.

Analyst Recommendations: Buy, Sell, or Hold?

Following the Q1 results and guidance revision, analysts have offered varied recommendations on Infosys stock:

• Neutral to Positive: Some analysts are taking a neutral to positive stance, citing the company's inexpensive valuations after a 17% slide in 2025.
• Buy: Nuvama remains positive on Infosys, maintaining a 'BUY/SN' rating, while also raising the target price to Rs 1,850 from Rs 1,700. Emkay has also maintained a 'BUY' rating on Infosys, setting a revised target price of Rs 1,750. Jefferies retained its 'buy' rating while raising its target for Infosys shares by Rs 200 to Rs 1,860. According to Bernstein, the IT firm delivered a solid quarterly performance, beating its revenue and order book estimates. The brokerage kept its 'outperform' rating for Infosys while raising its target price to Rs 1,820 from Rs 1,760.
• Hold: Antique has maintained a 'Hold' rating on Infosys with a target price of Rs 1,750.
• Equal-Weight: Morgan Stanley found Infosys's results to be "more balanced" than its peers, maintaining an 'equal-weight' rating and raising its target for the largecap IT stock by Rs 30 to Rs 1,700.
• Outperform: According to Spark, TipRanks' AI Analyst, INFY is a Outperform. Infosys' strong financial performance and effective cash management are the most significant strengths, contributing to a high overall score.

Factors to Consider

Investors should consider the following factors when deciding whether to buy, sell, or hold Infosys stock:

• Macroeconomic Environment: The global macroeconomic environment remains uncertain, with clients exhibiting a wait-and-watch approach.
• Discretionary Spending: There has been no significant improvement in discretionary spending or decision cycles, which could impact future growth.
• Margin Pressures: Infosys continues to face margin headwinds, including wage hikes and increased investments.
• AI and Digital Transformation: The company's focus on enterprise AI and digital transformation positions it well for long-term growth, but near-term catalysts may be limited.

Conclusion

Infosys has delivered a steady Q1 performance and provided cautiously optimistic guidance for FY26. The company's strengths lie in its strong deal wins, focus on AI, and solid financial performance. However, investors should remain aware of the macroeconomic uncertainties and margin pressures that could impact the stock's performance. Analyst recommendations vary, reflecting the complexities of the current market environment, and investors should conduct thorough research and consult with financial advisors before making any decisions.