Infosys Shares Drop 4% on Q2 and Guidance Miss; Analysts’ Calls

Infosys Growth Outlook Comes Under Pressure as Guidance Is Cut

A softer outlook and earnings miss weighed on the shares, while large deal wins offered a counterpoint to concerns about near-term demand and pricing.

Guidance cut shifts attention from revenue growth to execution

Infosys shares dropped more than 3.5% in Monday’s session after the IT company’s September-quarter results and revised outlook disappointed investors. The stock fell as much as 3.88% to ₹1,109.70 on the BSE, compared with its previous close of ₹1,154.50. The move came after the results were announced following Friday’s market close.

The company lowered its FY27 revenue growth guidance to 1%-2% year on year in constant currency, from 1.5%-3%. Its organic growth range was also reduced, to -0.5% to 0.5% from -0.2% to 1.3%. The revision puts greater emphasis on how effectively Infosys can convert demand into revenue, particularly as analysts expect sequential revenue declines in the next two quarters due to seasonality.

Infosys reported net profit of ₹7,828 crore, up 6.2%, and revenue of ₹49,244 crore, up 10.7%. Revenue topped analyst estimates of ₹49,108 crore, but profit was below the ₹7,904 crore consensus. That mixed result means the guidance cut, rather than the headline revenue growth alone, is likely to shape investors’ assessment of the company’s near-term trajectory.

Pricing pressure and AI productivity remain key concerns

Motilal Oswal Financial Services expects competitive intensity to limit the price increases it had anticipated. It also cited wage hikes, acquisition amortisation and softer seasonality as factors that could weigh on second-half margins, even as Infosys maintained its EBIT margin guidance.

The brokerage also highlighted a tension around artificial intelligence: AI-related revenue is scaling up, but productivity gains passed on to clients could pressure pricing on existing work. In its view, deal conversion and the ability to defend commercial terms will be important to watch. This helps explain why strong technology demand does not automatically translate into faster reported growth or stronger earnings.

Large contracts offer a counterweight to the weaker outlook

Antique Stock Broking pointed to large-deal total contract value of $5.2 billion, with 62% classified as net new, above its $4 billion estimate. The bookings included a seven-year net-new deal worth more than $2 billion with a financial-services client, as well as a $1 billion renewal. The new deal’s transition is expected to begin in late 4Q and add more than 1% to FY28 growth, according to the brokerage.

These wins may support the longer-term revenue pipeline, but their value to investors will depend on conversion and delivery over time. They do not remove the near-term risks flagged by the lower guidance, including softer seasonal demand and pricing pressure.

Analyst targets diverge on how much optimism is warranted

Motilal Oswal cut its FY27 and FY28 earnings-per-share estimates by about 1.5% and 2%, respectively, but retained a BUY rating and a ₹1,300 target, based on 16 times FY28 estimated EPS. Emkay Global also trimmed its FY27-29 estimates, while keeping its BUY call and ₹1,300 target.

Antique remained more cautious, reiterating HOLD with a ₹1,115 target despite the deal momentum. It kept its earnings estimates largely unchanged. The differing calls reflect a debate over whether bookings and valuation can offset a slower growth outlook and ongoing pricing pressure. Infosys shares are down 31% so far this year, adding to the importance of how the company delivers against its revised expectations.

Key Highlights

• Infosys cut FY27 constant-currency revenue growth guidance to 1%-2% from 1.5%-3%.
• Q2 revenue grew 10.7% to ₹49,244 crore, exceeding estimates, while net profit rose 6.2% to ₹7,828 crore but missed expectations.
• Large-deal TCV reached $5.2 billion, including a net-new deal worth more than $2 billion.
• Analysts cited seasonality, competitive pricing and AI-related productivity pass-through as risks to near-term performance.
• Motilal Oswal and Emkay retained BUY ratings with ₹1,300 targets; Antique reiterated HOLD with a ₹1,115 target.

Investor Note: The guidance revision and pricing outlook warrant close attention, while large deal wins may support growth further out. Investors should assess execution and earnings delivery against the reduced outlook rather than relying on brokerage targets alone.