Infosys flat after cutting FY27 revenue guidance to 1-2%

(INFY) traded flat on October 26, the first session since it cut its FY27 constant currency revenue growth guidance to 1–2% from 1.5–3%. The company announced its Q2 FY27 results after Indian market hours on Friday, October 23, and its US-listed ADRs fell 6.3% that day. Net profit rose 6.2% year-on-year to ₹7,828 crore, and revenue grew 10.7% to ₹49,244 crore. Revenue of $5.145 billion was roughly in line with estimates. Large deal wins reached $5.2 billion. The AI business grew 29% and now makes up over 10% of revenue. The board raised the interim dividend 13% to ₹26 per share. Operating margin guidance stayed at 20–22%. The flat reaction shows the cut was largely expected. The stock has already fallen about 29% this year, so much of the bad news was priced in. Strong deal wins and the growing AI business give some support. Brokerages made only mild target changes. Nomura kept its Buy rating with a ₹1,300 target, while Nirmal Bang has the lowest target at ₹902 with a Sell rating. The organic picture is weaker than the headline guidance. The 1–2% range includes an unchanged 170 basis point contribution from acquisitions. Without it, organic growth works out to roughly -0.7% to +0.3%, which is essentially no growth. Nomura flagged pricing pressure from tougher competition, and management said AI-led productivity gains are squeezing traditional services pricing. The Q2 margin also missed estimates, and salary hikes in Q3 and Q4 will add cost pressure. Investors should watch the conversion of $5.2 billion in deal wins into revenue, pricing trends, margins after wage hikes, and AI revenue growth. The key question is whether Infosys can return to organic growth before AI-driven pricing pressure erodes its core business further. Disclosure: I do not hold any position in Infosys Limited. This post is for informational purposes only and is not investment advice.