Infosys shares fell as much as 4% to ₹1,107 on the NSE on Monday following the company's announcement of a reduced FY27 revenue growth forecast. According to reports from The Economic Times, the stock clawed back most of that loss and was trading at ₹1,150.25 at about 2:30 pm, down 0.31%. The Nifty IT index followed a similar pattern, dropping about 2.5% in early trade before recovering most of that ground by late morning. This decline came after the IT sector had experienced its strongest week since 2008, with the Nifty IT index gaining about 11.7% in the week to October 16. The stock has declined 30% so far this year, compared with a 13.5% fall in the Nifty 50, with the company's market capitalisation standing at approximately ₹4.6 lakh crore.
Infosys now expects FY27 revenue to grow 1-2% in constant currency, down from the 1.5-3% range it gave in July. As reported by The Economic Times, the company kept its operating margin forecast at 20-22%. The company revised its FY27E revenue growth guidance to 1%-2% year-on-year from 1.2%-2.8% earlier, with the lower end assuming further macroeconomic deterioration while the upper end factors in macro environment improvement. The September quarter revenue came in at $5,145 million, up 1.5% from a year earlier and 1.2% from the previous quarter in constant currency. Operating margin held steady at 21%, but declined 10 basis points sequentially, and earnings per share rose 8.7% year on year to ₹19.32, though free cash flow fell 8.1% to ₹8,898 crore. The company attributed the revision to pricing pressure from intensifying competition, which resulted in lower-than-expected price increases and softer volume growth in Q2FY27, below its expectations. According to Goldman Sachs, the revised FY27 revenue growth guidance marks the second consecutive quarter of a cut, with the midpoint of the updated guidance implying modest negative organic revenue growth for FY27.
The quarter showed positive momentum in key areas despite the forecast revision. According to The Economic Times, Infosys won $5.2 billion of large deals, 62% of it new business, including one mega deal worth more than $2 billion. The company's AI-related revenue grew 29% from the previous quarter and now makes up 10.5% of the total revenue, up from 8.2% in the June quarter. However, the company's order book and AI business are growing while management sees less top-line growth this year than it did three months ago. Net-new business accounted for 62% of the total deal value, indicating strong client acquisition momentum. Goldman Sachs noted that strong deal wins during the quarter, driven by a mega deal, should partly cushion the revenue headwind in FY28 from the exit of a manufacturing client, though it highlighted sluggish demand, client-specific ramp-downs, subdued volume growth and changes in client spending priorities.
Infosys reported mixed financial results for the September quarter that fell short of market expectations. As reported by The Economic Times, the company posted a 6.2% year-on-year increase in consolidated net profit to ₹7,823 crore, but revenue grew 10.7% to ₹49,244 crore, while operating profit increased 10.4% to ₹10,330 crore. However, operating margin declined by 10 basis points sequentially to 21%, raising investor concerns about margin pressures. Measured in rupees, revenue rose 10.7% from a year earlier to ₹49,244 crore, but strip out currency movements, and growth was just 1.5%. The currency effect of approximately 9 percentage points reflects the rupee trading near 95 to the dollar. Citi maintained its neutral rating on Infosys with a target price of ₹1,105, describing the September-quarter results as largely in line on revenue and earnings before interest and tax (EBIT), while noting the total contract value (TCV) of more than $5 billion as strong.
Market analysts remain cautious about Infosys's near-term prospects despite strong deal wins. Goldman Sachs maintains its Neutral rating on Infosys with a target price of ₹1,000, highlighting that margins remain range-bound partly due to pricing pressure amid elevated competition. The brokerage noted that the second consecutive cut to FY27 guidance points to continued weakness in revenue visibility, with the revised guidance midpoint implying modest negative organic growth. However, Nomura remains bullish on the stock, while Morgan Stanley, Citi and Choice Institutional Equities have flagged growth concerns with differing ratings and target prices. The revised forecast breaks from the upbeat tone set by other IT companies, with TCS reporting a 15% rise in quarterly profit, HCLTech booking a record $3.3 billion of new deals and raising the lower end of its FY27 growth forecast, and Tech Mahindra's profit rising about 33%. The Nifty IT index had rallied roughly 16% over the month to October 23, but broader market sentiment remained subdued as the company's reduced growth forecast and profitability concerns overshadowed its strong deal pipeline and expanding AI business.
