Jefferies has reiterated its buy rating on Infosys with a target price of ₹1,700 per share after management highlighted during recent NDR interactions that the overall demand environment remains steady, although skewed towards cost-optimisation deals rather than broad-based discretionary spending. The brokerage noted that clients continue to prioritise efficiency-led programmes amid a weak macro backdrop, and while this could keep near-term revenue growth subdued, it also reinforces Infosys’ positioning in large transformation and cost-takeout mandates.
According to Jefferies, Infosys acknowledged that AI-led deflation may act as a short-term headwind for revenue expansion as automation reduces effort-based billing in certain segments. However, the company believes AI will be a net positive over the long term as adoption scales, use cases deepen and new monetisation models emerge. The brokerage added that operational metrics remain resilient, with rising revenue per employee, improving pricing discipline and lower third-party costs expected to support margins through FY26.
Infosys also indicated strong cash generation, with Jefferies highlighting that free cash flow conversion is likely to remain above 100% in FY26. The brokerage said this reinforces balance sheet strength and provides consistent capital allocation flexibility even as growth normalises. Jefferies therefore maintained its constructive stance, citing attractive valuations relative to historic averages and confidence in Infosys’ ability to navigate the current spending cycle.
Disclaimer: The views and recommendations above are those of Jefferies. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
