Infosys Downgraded by JPMorgan, HSBC on Weaker Growth Forecast and Earnings Miss

Infosys has been downgraded by both JPMorgan and HSBC after the IT services giant missed first-quarter earnings expectations and lowered its full-year revenue guidance for the second consecutive quarter. The analyst actions reflect growing concerns over the company's slowing business momentum and deteriorating near-term growth outlook.

Analyst Actions

Two major investment banks revised their ratings and price targets for Infosys, citing a weaker outlook despite the company's relatively inexpensive valuation.

• JPMorgan: Downgraded the company to Neutral from Overweight, cutting its price target to ₹1,050 from ₹1,200.
• HSBC: Lowered its rating to Hold from Buy and reduced its price target to ₹1,110 from ₹1,340.

Rationale Behind the Cuts

Analysts at both firms pointed to several headwinds impacting Infosys's performance. These include weaker client demand, pricing deflation driven by artificial intelligence, and specific contract-related issues, such as a termination in its Energy, Utilities, Resources and Services segment and reduced work from a key manufacturing client.

JPMorgan noted that these factors have negatively impacted the company's growth momentum. The bank highlighted a slower conversion of deal wins into actual revenue, even as large-deal signings remained healthy during the quarter.

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Guidance and Performance Metrics

Infosys management cut its fiscal 2027 constant-currency revenue growth guidance to a range of 1.5% to 3.0%, down from a previous forecast of 1.5% to 3.5%. JPMorgan described this reduction as sharper than expected, forecasting that Infosys will now lag its peers on growth this year.

HSBC added a note of caution, warning that the revised guidance may still not be conservative enough, based on management commentary about weakness extending into the second quarter. Despite the revenue challenges, Infosys reported resilient operating margins and maintained its FY2027 EBIT margin guidance of 20%-22%. The company also announced $3.6 billion in large-deal total contract value for the quarter.

CEO Transition

Infosys also announced that Ashiss Kumar Dash, the current head of its Energy, Utilities, Resources and Services business, will succeed Salil Parekh as Chief Executive Officer starting in April 2027. According to the source, both JPMorgan and HSBC viewed the appointment of an internal candidate favorably, suggesting it will support a smoother leadership transition. However, JPMorgan cautioned that broader management churn could continue in the near term.