Infosys Share Price Outlook: Jefferies Anticipates 17% Growth Despite Weak Q4 Performance
Current Market Analysis
On April 17, 2025, Infosys released its Q4 results, revealing a 11.75% year-on-year decline in consolidated net profit, amounting to ₹7,033 crore compared to ₹7,969 crore the previous year. This downturn, coupled with ongoing concerns within the IT sector due to trade tensions and tariff uncertainties, has prompted a cautious investor sentiment regarding client spending. However, Jefferies remains optimistic, predicting a 17% upside for the tech giant’s share price.
Quarterly Performance Overview
- Revenue Increase: Despite the decline in profits, Infosys reported an 8% rise in operating revenue, reaching ₹40,925 crore from ₹37,923 crore in the same quarter last year.
- Constant Currency Growth: Revenues grew 4.8% year-on-year in constant currency terms, although there was a 3.5% sequential decline.
The unexpected drop in revenue was a key disappointment for investors, particularly given that revenues fell 3.5% sequentially. Jefferies pointed out that this decline was largely due to a significant reduction in pass-through revenues, which accounted for two-thirds of the overall drop.
Factors Influencing Jefferies’ Positive Outlook
-
Margin Resilience: Despite the pressures of wage increases in Q4, margins only dipped slightly, down 30 basis points to 21.0%. Lower overhead costs and reduced pass-through costs helped cushion the margin decline. Infosys has projected margins to remain between 20-22% for FY26, aligning with market expectations.
- Attractive Risk-Reward Ratio: Jefferies has issued a buy rating for Infosys, adjusting FY26 and FY27 EPS estimates downwards by 2-3% to account for the revenue miss. Nevertheless, they forecast an impressive 9% EPS CAGR from FY26 to FY28, with projections for FY27 EPS ranging from ₹67 to ₹76. This leads to a bear case value of ₹1,340 and a bull case of ₹1,980. With current pricing reflecting a 5% downside and a 40% upside, the risk-reward profile appears appealing.
Investment Recommendations
Jefferies maintains a buy stance on Infosys with a revised price target of ₹1,660, based on a 23x price-to-earnings ratio. As the company navigates through market challenges, its strategic focus on maintaining margins and revenue growth could provide a solid foundation for recovery and future gains.
For more insights on market movements and investment strategies, check out our latest articles on tech stocks and industry trends.
