Shares of Infosys fell 4% after the company narrowed its FY27 revenue growth forecast to 1-2% in constant currency, down from the 1.5-3% range it had offered earlier. The revision arrived alongside a Q2FY27 print that missed estimates on both revenue and margins, with management blaming intensifying competition for weaker-than-expected price increases and softer volumes.
Guidance math includes a large acquisition tailwind
The new range still bakes in roughly 170 basis points of contribution from acquisitions, unchanged from the prior outlook. That means organic growth is effectively being guided to a contraction at the low end. The company said the floor assumes further macroeconomic deterioration while the ceiling factors in an improvement; either way, the midpoint has shifted down. Revenue from operations rose 11% year-on-year to Rs 49,244 crore in the quarter, but the beat on the top line did not translate to the bottom.
Brokerages split on whether the cut was a surprise
Nomura kept its Buy rating and Rs 1,300 target, arguing the guidance was slightly above its own lowered expectations. The brokerage cut its FY27-28F revenue growth estimates to 1.1-2.0% from 1.2-2.8% previously, noting that strong deal wins could cushion FY28 but conversion remains the open question. Citi stayed Neutral while lifting its target to Rs 1,105 from Rs 1,030, a level that now implies 4.3% downside from the last close of Rs 1,154.50. The firm said a recent mega deal removes the risk of Infosys entering FY28 at a structural disadvantage to peers, though AI-driven pricing pressure and cautious discretionary spending keep the sector outlook muted. Choice Institutional Equities maintained a Reduce rating and Rs 1,060 target, based on 13 times the average of FY28E and FY29E EPS, citing mixed execution and a slower recovery trajectory.
The real variable is deal conversion, not deal signing
All three notes converge on the same tension: the order book looks healthy, but the pipeline is not turning into revenue fast enough to offset pricing compression. Until discretionary budgets reopen or AI productivity gains stop being competed away in contract negotiations, the guidance range is less a forecast than a statement of hope.