Infosys shares gain after Motilal Oswal upgrades, projects 39% upside on three key factors

Shares of Infosys Ltd

. gained up to 2.5% on Monday, November 24, after brokerage firm Motilal Oswal upgraded the stock to "buy" and raised its price target on the stock, which projected an upside potential of 39% from current levels.

Motilal Oswal upgraded Infosys to "buy" from its earlier rating of "neutral", eight months after downgrading the stock in March 2025 citing limited catalysts and little support from valuations.

Since then, the setup overall has improved, according to Motilal Oswal, thereby driving an upgrade back to a "buy" rating.

Here are some of the important factors that Motilal Oswal cited in its upgrade for Infosys:

First, the transition from hardware-led capex to services-led spending should meaningfully benefit Infosys' descretionary-heavy portfolio, positioning the company as a key beneficiary of enterprise-wide AI investments.

Additionally, its proprietary AI stack, Topaz suite and full-stack application services capabilities should come back into favour as clients scale broader modernization and AI programs.

Lastly, at current valuations, the stock is trading near its 10-year average price-to-earnings multiple and at a 13% discount to its five-year average.

"We believe upside risks outweigh the potential downside, offering an attractive risk-reward setup," Motilal Oswal stated, adding that Infosys has raised the lower end of its guidance in both quarters of the first half of financial year 2026, indicating a steady demand environment and better visibility.

The quality of revenue is also likely to be superior compared to last year, with pass-through revenue expected to be low. This, along with efficiency gains from Project Maximus, should support a healthy margin trajectory.

Motilal Oswal has raised its financial year 2027-2028 growth estimates, with the brokerage now expecting a 5.5% and 8.5% year-on-year growth in these two financial years, led by a demand recovery, and further acceleration in financial year 2028.

51 analysts have coverage on Infosys, of which 37 have a "buy" rating, 12 say "hold", while two have a "sell" rating on the stock.

Shares of Infosys are currently trading 2.1% higher at ₹1,577. The stock is still down 16% so far on a year-to-date basis.