Infosys' stock is in focus following its Q3 results. Although net profit fell due to a one-time charge, its US-listed ADRs jumped nearly 8%, signaling positive sentiment.
Infosys shares are expected to stay in focus as markets open, following the IT major's Q3 FY26 earnings and a strong rally in its US-listed ADRs. Even though the company reported a profit dip, analysts believe improving demand and solid deal wins could lift investor sentiment.
US Investors Cheer Results, ADRs Jump Nearly 8%
While Indian markets were closed, Infosys' American Depository Receipts (ADRs) climbed 7.6 per cent across two US trading sessions. The sharp rise signals positive sentiment among overseas investors and raises hopes of a similar reaction when the stock trades in India.
Profit Falls, But One-Time Cost Tells the Full Story
Infosys reported a 2.2 per cent year-on-year drop in net profit to Rs 6,654 crore for the December quarter. However, the decline was mainly due to a one-time labour code-related charge of Rs 1,289 crore.
Related Articles
Stripping out this expense, the company's core performance remained stable. Operating margins improved slightly to 21.2 per cent, while revenue grew 8.9 per cent year-on-year to Rs 45,479 crore, offering comfort to investors.
Strong Deal Pipeline Boosts Confidence
One of the biggest positives from the results was the company's deal momentum. Infosys signed contracts worth $4.8 billion during the quarter, including two mega deals. More than half of these were new deals, helping strengthen visibility for future growth.
Guidance Upgrade Signals Improving Demand
Despite global uncertainty and seasonal weakness, Infosys raised its FY26 revenue growth guidance to 3–3.5 per cent in constant currency terms. Brokerages see this upgrade as a strong signal that demand conditions are gradually improving.
Brokerages Stay Bullish on Infosys
Global brokerage CLSA reiterated its 'Outperform' rating with a target price of Rs 1,779, citing steady margins, strong deal wins and the upgraded guidance.
HSBC also maintained a 'Buy' call and raised its target price to Rs 1,870. The brokerage pointed to growing clarity around AI-led client spending and improving demand in banking and energy sectors.
AI Spending and Recovery in Discretionary Demand
Analysts said management commentary suggests early signs of recovery in discretionary spending. Increased interest in AI-driven transformation, platform modernisation and vendor consolidation deals is helping improve the outlook, even as sectors like manufacturing and hi-tech remain under pressure.
