What Does Nomura’s Buy Recommendation Mean For Infosys Investors?
Infosys Ltd. is one of India’s leading IT services and consulting companies, founded in 1981 and headquartered in Bengaluru. It provides a wide range of digital services, including IT consulting, software development, cloud solutions, artificial intelligence, and business process management. Infosys serves clients globally across multiple industries such as banking, healthcare, manufacturing, and retail. Known for innovation and strong corporate governance, the company consistently ranks among the top Indian IT exporters and has a robust presence in North America, Europe, and Asia-Pacific markets.
Nomura’s Key Highlights On Infosys
Nomura has issued a Buy recommendation on Infosys, citing several strategic moves that enhance shareholder value. A major highlight is the largest-ever share buyback by Infosys, amounting to ₹18,000 Cr at ₹1,800 per share, representing 2.4% of equity on a tender basis. This move is expected to support stock price stability and signal management’s confidence in the company’s cash generation and long-term growth.
Revenue Outlook And Growth Expectations
For FY26F, Infosys’ USD revenue growth is projected at 3.8% year-on-year, factoring in 40 basis points from recent acquisitions but excluding the Versent deal. While growth remains moderate compared to historical peaks, the company’s diversified portfolio and steady client demand are expected to provide resilience against global IT spending fluctuations.
Valuation And Dividend Yield
Infosys currently trades at around 20x FY27F EPS, which is considered attractive given its strong cash flow generation and low-risk business model. The company also offers a healthy dividend yield of 4.4%, reinforcing its position as a steady income-generating investment for long-term shareholders. Nomura highlights this combination of buyback, steady growth, and dividend as a compelling investment case.
Strategic Moves And Shareholder Impact
The buyback, coupled with consistent dividends and moderate revenue growth, positions Infosys as a long-term compounding stock. Management’s focus on selective acquisitions, digital capabilities expansion, and client retention ensures that revenue streams remain robust. The tender-based buyback also underscores a shareholder-friendly approach, signaling confidence in future earnings stability.
Broader Implications For IT Sector Investors
Infosys’ actions are reflective of the broader Indian IT sector’s trend towards returning capital to shareholders while focusing on sustainable growth. Buybacks and dividends, combined with moderate revenue expansion, may encourage other IT companies to adopt similar strategies. For investors, this reinforces the importance of assessing risk-adjusted returns alongside growth potential.
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Investor Takeaway
Nomura’s recommendation reinforces Infosys’ position as a high-quality IT stock offering a mix of capital appreciation and steady dividends. The record buyback, moderate revenue growth, and strong dividend yield make it attractive for both long-term investors and income-focused shareholders. While the IT sector faces potential challenges from global economic shifts, Infosys’ strategy of selective acquisitions, client diversification, and shareholder-friendly actions provides resilience and long-term value creation potential.
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
