Infosys Shares Fall 4% Following FY27 Revenue Growth Guidance Cut

Infosys shares fell 4 per cent on Monday following the IT services major's decision to cut its FY27 revenue growth guidance. The company revised its constant currency (CC) revenue growth outlook to 1-2 per cent, down from its earlier projection of 1.5-3 per cent.

The downward revision marks the second consecutive quarter that Infosys has lowered its growth outlook. According to Goldman Sachs, the updated guidance midpoint implies modestly negative organic revenue growth for FY27. Brokerage notes highlighted that sluggish demand, client-specific ramp-downs, subdued volume growth, and shifting client spending priorities weighed on investor sentiment.

For the September quarter, Infosys reported revenue of ₹49,244 crore, marking a 1.5 per cent increase year-on-year. Net profit for the quarter rose 6.2 per cent year-on-year to ₹7,823 crore. Total contract value (TCV) remained a key positive, with trailing 12-month TCV increasing 41 per cent year-on-year, supported by major deal wins including a $2 billion mega deal.

Major brokerages shared varied perspectives on the earnings report and outlook. Goldman Sachs maintained a Neutral rating with a target price of ₹1,000, noting that strong deal wins should partly cushion revenue headwinds in FY28 arising from the exit of a manufacturing client. Citi also maintained a Neutral rating with a target price of ₹1,105, describing the quarter's results as largely in line on revenue and EBIT while keeping its FY27 and FY28 EPS estimates broadly unchanged.

Jefferies maintained a hold rating but lowered its target price to ₹1,140 from ₹1,160, citing softer margins and a 75-basis-point cut to organic growth guidance. HSBC kept its hold rating with a target price of ₹1,110, pointing out that margins are likely to face pressure in the second half of the year due to wage hikes. Meanwhile, UBS maintained a buy rating with a target price of ₹1,415, noting that second-quarter performance came in slightly below expectations while Infosys maintained its operating margin guidance of 20-22 per cent.

Nomura and Motilal Oswal retained their buy ratings with a target price of ₹1,300, highlighting attractive valuations and strong bookings despite a modest earnings miss. Kotak maintained an add rating with a fair value of ₹1,200, pointing to a weak growth profile, in-line margins, and sharp revenue declines in the retail and hi-tech segments as indicators of cautious enterprise discretionary spending.

"The downward revision of revenue growth guidance by a major IT bellwether like Infosys highlights the cautious spending environment currently prevailing among global clients. While strong deal wins and robust contract values provide long-term revenue visibility, near-term macroeconomic pressures and discretionary spending cuts continue to impact organic growth trajectories. For the broader technology sector, maintaining operating margins while navigating sluggish demand will remain a key challenge in the coming quarters." — Dr. Shishir Gupta, Founder & CEO, StartupLanes