Infosys Slides Nearly 4% as FY27 Guidance Cut to 1-2% Outweighs a $5.2 Billion Deal Haul

Infosys shares fell sharply in early trade on Monday, the first Indian session since the IT major reported September-quarter results and lowered its full-year growth outlook. The stock dropped as much as 3.88% to Rs 1,109.70 on the BSE from Friday's close of Rs 1,154.50, making it one of the heaviest drags on the Sensex at the open. Its US-listed shares had already fallen about 6% on Friday after the numbers came out.

The guidance cut is the story

Infosys now expects FY27 revenue to grow 1-2% in constant currency, down from its earlier range of 1.5-3%. The trim to the lower end surprised analysts, many of whom had expected only the top of the range to come down. The organic growth band, which strips out acquisitions, was cut to between -0.5% and +0.5%, meaning the existing business is now expected to be roughly flat for the year. The company kept its operating margin band of 20-22% unchanged and flagged softness in North America, its largest market.

For the quarter, net profit rose 6.2% year on year to about Rs 7,823 crore, slightly below the roughly Rs 7,904 crore analysts had pencilled in. Revenue grew 10.7% in rupee terms to Rs 49,244 crore and beat estimates, though constant-currency growth was a modest 1.5% year on year. Operating margin held at 21%. The board declared an interim dividend of Rs 26 per share.

The bright spot: deals

Large-deal total contract value came in at $5.2 billion, up from $3.6 billion in the June quarter, with 62% of it from net-new work. That included a seven-year mega deal worth more than $2 billion with a financial services client, which is expected to begin transitioning late in the fiscal year and add over 1% to FY28 growth, and a separate renewal worth about $1 billion. AI-linked work now makes up about 10.5% of revenue and grew 29% sequentially.

Why the market cares more about the outlook

The tension is between a strong order book and weak near-term revenue. Brokerages broadly argue that AI-driven productivity gains are forcing Indian IT firms to pass on savings to clients, shrinking the value of existing contracts even as new deals are signed. Motilal Oswal expects revenue to decline sequentially over the next two quarters on seasonality and trimmed its FY27-28 earnings estimates by about 1.5-2%, while keeping a Buy rating and a Rs 1,300 target. Emkay also cut estimates but stayed at Buy, citing undemanding valuations. Antique Stock Broking held its Hold call with a Rs 1,115 target.

The stock was already down about 31% this year before Monday, part of a broad sell-off in traditional IT services names on fears that generative AI will deflate pricing. At around 16 times forward earnings in brokerage models, Infosys is cheap by its own history, but Monday's reaction suggests investors want evidence that the mega deals convert into revenue before paying up.

What to watch

The key markers now are the ramp-up timing of the $2 billion contract, any further cuts at the December-quarter update, and whether peers such as HCLTech and TCS see the same North American slowdown. Infosys is increasingly trailing those rivals on growth this year, and the gap will be closely tracked.

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