Infosys Guidance Cut Triggers 4% Slide as FY27 Revenue Forecast Lowered to 1-2%

The Quick Take

• Infosys Q2 FY27 net profit rose just 0.7% QoQ to Rs 7,823 crore, missing expectations for meaningful growth acceleration
• FY27 revenue growth guidance cut to 1-2% YoY from 1.5-3%, with only 170 bps contribution from acquisitions unchanged
• Shares tumbled 3.9% intraday extending a 25% one-year decline amid sustained IT demand headwinds
• UBS maintained a Buy rating with flagged weaker-than-expected near-term demand conditions

Infosys, India's second-largest IT services exporter by revenue, reported a muted Q2 FY27 performance that fell below market optimism for a discretionary IT spending recovery. The guidance reduction from 1.5-3% to 1-2% YoY growth, incorporating an unchanged 170 basis points contribution from acquisitions, signals that organic demand momentum remains subdued. This outcome arrives at a pivotal moment for the Indian IT sector, which has been grappling with client budget restraint in banking, financial services, and retail verticals amid elevated global interest rates and macro uncertainty across the US and European markets.

The guidance cut widens the performance gap between Infosys and sector-leader TCS, whose recent quarters showed comparatively steadier deal ramp-ups. Peer IT names including Wipro, HCL Technologies, and Mphasis are likely to face elevated scrutiny ahead of their own Q2 results, as investors recalibrate sector earnings multiples downward. Brokerage divergence with UBS maintaining a Buy while others flagged execution risk reflects genuine uncertainty about whether FY28 will see a meaningful demand rebound. Foreign institutional investors and India-focused tech funds may rotate to defensive positions within the sector until sustained deal-win data restores confidence.

Key variables to monitor include Infosys Q3 FY27 deal pipeline commentary, particularly large-deal signings in BFSI and manufacturing verticals, which typically provide 6-9 month revenue visibility. Any upward revision to the FY27 guidance range at the next quarterly update would serve as the primary bullish catalyst. On the macro side, the pace of US Federal Reserve rate cuts determines IT spending budgets at large North American clients, who account for the majority of Infosys revenue. A premature policy reversal or renewed US inflation pressure represents the single largest risk to the FY28 IT recovery thesis.

Synthesized from 4 sources.