Shares of information technology (IT) companies were in demand on Friday, with the National Stock Exchange’s (NSE’s) Nifty IT index rallying 3.3 per cent.
Photograph: Vivek Prakash/Reuters
This came after Infosys reported steady sequential growth, driven by health care boost and large deal rampup in a seasonally weak quarter (Q3FY26).
Share price of Infosys surged 5.6 per cent to Rs 1,689 on the NSE as the company revised its revenue growth guidance upwards while maintaining its operating profit margin band.
The top gainer in the Nifty IT index was Oracle Financial Services (Rs 7,899) which rallied 5.7 per cent, followed by Tech Mahindra, up 5.16 per cent, LTIMindtree (Rs 6,308) which rose 4.6 per cent and Mphasis (Rs 2,886.80) that gained 3.5 per cent.
Wipro, Coforge, Tata Consultancy Services (TCS), Persistent Systems and HCLTech — a part of the IT index — gained in the range of 2-3 per cent.
Nifty IT index was the top gainer among sectoral indices.
According to analysts at Elara Capital, Infosys is witnessing a recovery in the banking, financial services, insurance (BFSI) and energy verticals, while others may take some time to recover.
Infosys also mentioned that it is a preferred artificial intelligence (AI) partner for top-15 out of top-25 banking clients.
It is benefitting from vendor consolidation deals and deal total contract value (TCV) continues to see an upward trajectory, which should provide growth visibility in the medium term.
The company is working on 4,600 AI projects and has identified 6 AI-led value pools where they can drive faster growth, going forward.
The impact of H-1B visa constraints has been minimal, the brokerage firm said.
It maintains an ‘accumulate’ rating on Infosys with a target price of Rs 1,770 per share.
The management noted that discretionary spend remains selective and legacy business is seeing some compression on refresh because of the AI cycle.
The robust large-deal wins with TCV of $4.8 billion (57 per cent net new across 26 deals), however, was a key positive, according to ICICI Securities.
It expects financial services and Europe to see better growth and acceleration in FY27 over FY26.
Backed by strong year-to-date (YTD) performance, a healthy pipeline and robust deal wins, the management revised FY26 revenue growth guidance upward to 3–3.5 per cent in constant currency (CC) (versus 2-3 per cent earlier).
It maintained the adjusted operating margin band at 20–22 per cent, signalling confidence in sustained execution and improved growth momentum into FY27, the brokerage firm said in a note.
Meanwhile, analysts at Axis Securities anticipate a stronger growth recovery for the IT sector in FY27 compared to FY26.
It would be driven by an improvement in demand, more stable macro conditions, increased budgetary spending, deal ramp-ups, better utilisation and improved project execution.
Additionally, demand for emerging areas such as Generative AI, IT modernisation, Cloud transformation, and digital transformation continues to gain traction among key clients.
Over the past few quarters, clients of Indian IT services companies have curtailed IT budgets amid economic uncertainty, particularly in the US and Europe.
Many large enterprises continue to prioritise cost optimisation, leading to a rise in cost take-out deals, vendor consolidation, and reduction in headcount-related expenses.
