Infosys Ltd is Rated Buy

Current Rating and Its Significance

MarketsMOJO’s 'Buy' rating for Infosys Ltd indicates a positive outlook on the stock, suggesting it is expected to outperform the broader market over the medium to long term. This recommendation is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. The rating was revised to 'Buy' from 'Hold' on 22 December 2025, reflecting an improvement in the company’s overall mojo score from 54 to 70, signalling enhanced confidence in its prospects.

Quality Assessment

As of 05 February 2026, Infosys demonstrates excellent quality metrics. The company boasts a robust Return on Equity (ROE) averaging 31.88%, underscoring its ability to generate strong profits relative to shareholder equity. This level of profitability is a hallmark of a high-quality business with efficient capital utilisation. Additionally, Infosys has maintained a low debt-to-equity ratio, averaging zero, which highlights its conservative capital structure and limited reliance on external borrowing. Such financial discipline reduces risk and supports sustainable growth.

Valuation Perspective

The valuation grade for Infosys is currently rated as fair. The stock trades at a Price to Book (P/B) ratio of approximately 7.5, which is reasonable when compared to its historical averages and peer group valuations within the software and consulting sector. While the Price to Earnings Growth (PEG) ratio stands at 3.1, indicating a premium valuation relative to earnings growth, the company’s steady profit increase of 4.5% over the past year justifies this premium to some extent. Investors should note that despite the stock’s 1-year return of -18.77%, the underlying earnings growth and fair valuation metrics support the current positive rating.

Financial Trend Analysis

The financial trend for Infosys is assessed as flat, reflecting stable but moderate growth in recent quarters. The company’s net sales have grown at an annualised rate of 12.19%, signalling consistent revenue expansion. However, the stock’s year-to-date performance shows a decline of 4.67%, and the one-month and one-week returns have been negative at -4.07% and -7.04% respectively. Despite these short-term fluctuations, the six-month and three-month returns remain positive at 5.56% and 4.97%, suggesting resilience and potential for recovery. The flat financial trend grade indicates that while growth is steady, investors should monitor upcoming earnings and sector developments closely.

Technical Outlook

Technically, Infosys is mildly bullish as of 05 February 2026. The stock recorded a modest gain of 0.33% on the day, reflecting cautious optimism among traders. The mild bullishness suggests that the stock is showing signs of upward momentum but has yet to break decisively into a strong uptrend. This technical stance complements the fundamental analysis, indicating that the stock may offer attractive entry points for investors seeking exposure to the software and consulting sector.

Market Position and Institutional Confidence

Infosys holds a significant position in its sector, with a market capitalisation of approximately ₹6,22,758 crores, making it the second largest company in the Computers - Software & Consulting sector, trailing only Tata Consultancy Services (TCS). It accounts for 15.63% of the sector’s total market cap and generates annual sales of ₹1,73,173 crores, representing 17.06% of the industry’s revenue. Institutional investors hold a substantial 71.55% stake in the company, reflecting strong confidence from knowledgeable market participants who typically conduct rigorous fundamental analysis before investing.

What This Rating Means for Investors

For investors, the 'Buy' rating on Infosys Ltd suggests that the stock is expected to deliver returns above the market average, supported by strong fundamentals and a fair valuation. The excellent quality metrics, including high ROE and negligible debt, provide a solid foundation for long-term growth. Meanwhile, the flat financial trend and mild technical bullishness indicate that while the stock is not without short-term volatility, it remains a compelling investment opportunity within the technology sector.

Investors should consider the stock’s current valuation in the context of its growth prospects and sector dynamics. The fair valuation implies that the stock is not excessively expensive, but the premium PEG ratio suggests that expectations for future earnings growth are already priced in. Therefore, potential investors should monitor quarterly earnings and sector developments to assess whether the company continues to meet or exceed these expectations.

Sector and Industry Context

Infosys operates in the Computers - Software & Consulting sector, a space characterised by rapid technological innovation and evolving client demands. As the second largest player in this sector, Infosys benefits from scale, diversified service offerings, and a strong client base. Its consistent revenue growth and profitability metrics position it favourably against peers, although competition remains intense. The company’s ability to maintain its quality and valuation metrics amid sector challenges will be critical to sustaining its 'Buy' rating.

Summary

In summary, Infosys Ltd’s current 'Buy' rating by MarketsMOJO, last updated on 22 December 2025, is underpinned by excellent quality, fair valuation, stable financial trends, and mild technical bullishness as of 05 February 2026. The company’s strong market position, high institutional ownership, and consistent revenue growth further reinforce this positive outlook. While short-term price fluctuations exist, the stock remains an attractive option for investors seeking exposure to a leading software and consulting firm with solid fundamentals and growth potential.

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