CLSA upgrades Infosys to ‘Outperform’ on attractive valuations, strong demand

Global brokerage firm CLSA has upgraded Infosys from a ‘Hold’ to an ‘Outperform’ rating, citing attractive valuations and strong demand tailwinds. The firm has set a price target of Rs 1,978 per share, suggesting potential upside from current levels. CLSA’s analysis indicates that discretionary spending across key sectors remains stable, supporting continued growth for the IT services major.

Valuations and demand outlook remain strong

According to CLSA, Infosys' current valuation levels make it an appealing investment opportunity. The brokerage highlighted that the seasonally weak fourth quarter of FY25 has already been priced into the stock, minimizing downside risks. Moreover, the firm noted that Infosys' demand pipeline remains robust, particularly in high-growth areas such as cloud computing, data analytics, and enterprise resource planning (ERP).

Revenue guidance adjustments reflect improving outlook

Infosys has been progressively revising its revenue growth guidance for FY25. Initially, the company projected a modest 1 per cent to 3 per cent growth range, which was later revised to 3 per cent to 4 per cent at the end of the June quarter. By the third quarter, Infosys had further raised its expectations, forecasting revenue growth in constant currency terms between 4.5 per cent and 5 per cent for the full year. CLSA believes this improving outlook is indicative of Infosys’ strong execution capabilities and resilient demand environment.

CLSA expects a wider FY26 growth guidance range

The brokerage also pointed out that ongoing macroeconomic uncertainties, including tariff-related concerns, could lead Infosys to provide a broader revenue guidance range for FY26. Despite these uncertainties, CLSA remains optimistic about Infosys’ ability to navigate the evolving market landscape.

Other brokerages bullish on Infosys

Infosys has garnered attention from other global brokerage firms as well. BofA Securities has a price target of Rs 2,150 on the stock, citing Infosys as a key beneficiary in a recovering IT demand cycle. The firm expects Infosys to leverage growth opportunities in cloud, data services, and ERP solutions.

Stock performance and valuation insights

Infosys is currently trading at 23.5 times its 12-month forward price-to-earnings ratio, which is at a 5 per cent discount to its five-year average valuation multiple. However, the stock has faced selling pressure in recent months, declining over 10 per cent in 2025. On Friday, Infosys closed at Rs 1,685, down 1.8 per cent, marking the lowest point of the day. Despite this, analysts believe the stock remains well-positioned for long-term gains, backed by strong fundamentals and improving demand trends.