Infosys Earnings: Macro Headwinds Waver Near-Term Growth Outlook; Fair Value Estimate Cut

Narrow-moat Infosys reported fourth-quarter earnings that aligned with our profitability estimates, but the outlook fell short of our expectations. Like its Indian IT services peers, Infosys faced pressure from ongoing global challenges during the quarter. Management issued a bleak fiscal 2026 guidance, expecting 0%-3% revenue growth in constant currency and operating margin in the range of 20%-22%. The upper end of this range reflects cautious optimism on deal momentum, while the lower end recognizes growing risks from ongoing macroeconomic headwinds and restrained discretionary spending. We have revised our estimates accordingly and lowered our fair value estimate to $18 from $20. We view shares as slightly undervalued.