Domestic brokerage Deven Choksey Research has reaffirmed a BUY rating on Infosys Ltd, setting a 12-month target price of Rs 1,254 against a current market price of Rs 1,051, implying 19 percent upside. The July 24 note frames the IT bellwether's story around an accelerating artificial intelligence revenue stream, a record deal pipeline and a disciplined, capital-light business model. First-quarter results for FY27 showed revenue climbing 14 percent year-over-year to Rs 4,82,110 million, even as management trimmed its full-year growth guidance slightly to reflect a cautious global spending environment. The brokerage's valuation rests on 16 times projected FY28 earnings per share, underscoring confidence in the company's multi-year AI-led transformation despite near-term guidance caution and an upcoming leadership transition.

AI Business Crosses Critical Mass

Revenue contribution from artificial intelligence services has surged from 5.5 percent in the third quarter of FY26 to 8.2 percent in the first quarter of FY27, translating into an annualized run rate approaching $1.7 billion, according to the report. More than 80,000 Infosys employees are now embedded in AI-assisted client delivery work, using tools including Cloud Code and Codex. The company is simultaneously assembling a 6,000-member "Frontier Engineer" team pairing technical depth with business context, while its Topaz Fabric platform — bolstered by partnerships with OpenAI and Anthropic — positions the firm as a data-sovereign, model-agnostic enterprise AI provider. Management told analysts the pipeline of AI-linked opportunities already exceeds current revenue contribution, and stressed this growth is not merely an accounting reclassification of existing work.

Deal Wins Signal Durable Growth, Not Just Renewals

Total contract value for FY26 reached a record $14.9 billion, up 24 percent year-over-year, with 55 percent classified as net new business. The momentum extended into the new fiscal year, with Q1 FY27 delivering $3.6 billion in TCV and a 61 percent net-new share, including six consolidation deals worth $700 million. Deven Choksey Research views the high proportion of net-new bookings as evidence that Infosys is winning incremental wallet share through vendor consolidation, rather than simply rolling over existing contracts — a distinction the brokerage considers meaningful for future growth visibility.

Guidance Trimmed, Margins Hold Firm

Infosys revised its FY27 constant-currency revenue growth guidance downward to a range of 1.5 to 3.0 percent, from the previously communicated 1.5 to 3.5 percent, citing a one-time client decision and softer-than-anticipated volumes. Operating margin guidance, however, was retained within the 20 to 22 percent band, supported by the ongoing Project Maximus efficiency program, currency tailwinds, and improving utilization, which recovered to 84.9 percent from 83.0 percent in the prior quarter. Wage hikes are scheduled to roll out in October and January, a factor the brokerage flags as a modest margin headwind in the second half.

Capital Discipline Remains a Core Pillar

Free cash flow conversion stood at 116 percent of net profit, with the company committed to returning 85 percent of cumulative free cash flow to shareholders on a rolling five-year basis. Management reiterated that Infosys will not invest in data center infrastructure, preserving its asset-light positioning even as AI capital intensity rises elsewhere in the technology sector. A final dividend of Rs 25 per share for FY26 was paid in June.

Leadership Transition on the Horizon

The company's board has named Ashiss Kumar Dash, a 31-year Infosys veteran and IIT Kharagpur alumnus, as CEO Designate effective July 23, 2026. Dash is set to succeed current CEO Salil Parekh on April 1, 2027, for a five-year term, with a structured mentorship handover process running through the transition period. The brokerage's key risks section flags execution uncertainty during this changeover as a factor to monitor.

Financial Snapshot and Valuation

Deven Choksey Research values Infosys at 16 times its FY28 estimated earnings per share of Rs 78, arriving at the Rs 1,254 target. The brokerage projects revenue, EBIT and profit-after-tax compound annual growth of 4.5 percent, 4.7 percent and 3.8 percent respectively between FY26 and FY28.

Levels Investors Should Watch

With the stock trading near Rs 1,051, the 52-week range of Rs 984 to Rs 1,727 highlights the extent of the recent pullback. The brokerage's target of Rs 1,254 marks the level to watch on the upside, while sustained weakness below the 52-week low would challenge the bullish thesis. Key risks cited include limited disclosure separating AI-driven gains from legacy revenue compression, the possibility of further guidance cuts, execution risk during the CEO transition, and persistent softness in the Retail and Communications verticals, which together account for roughly a quarter of revenue.