Infosys has once again lowered its FY27 constant-currency (CC) revenue guidance to 1-2%, down from 1.5-3% earlier and 1.5–3.5% at the start of the fiscal year. Announcing its September quarter (Q2FY27) results, the company said a shift toward offshore delivery and a deal exit could hit FY27 growth by 1.8-2%.
This signals a slower-than-expected second half, raising fears of underperformance against peers. By comparison, HCL Technologies delivered 2.3% revenue growth in Q2 and raised its overall revenue guidance to 2.5%-4% from 1%-4%. While Infosys outpaced Tata Consultancy Services’ (TCS) 0.5% growth, that provides little comfort.
“Infosys has the highest exposure to application services among tier-1 Indian IT companies, a service line structurally more vulnerable to AI-driven deflation,” said Systematix Shares and Stocks (India). The revised guidance implies limited organic growth of 0% to +0.5%, compared with the previous estimate of -0.2% to +1.3%, it added. Organic growth protects profit margins and avoids high financial and integration risks of mergers and acquisitions.
Notably, Infosys delivered modest back-to-back performances in Q1 and Q2—traditionally two of its strongest quarters. Sequential CC revenue grew 1.2% in Q2FY27, missing consensus estimates slightly, with around 40 basis points coming from acquisitions. Soft volumes, muted pricing amid intense competition, AI-led productivity deflation, and cautious discretionary spending weighed on performance. The retail and hi-tech verticals bore the brunt of lower third-party revenues and client-specific slowdowns, while financial services, energy & utilities, and manufacturing fared relatively better. Meanwhile, AI revenue expanded to 10.5% of overall revenue in Q2, up from 8.2% in Q1.
Earnings before interest and tax (Ebit) margin fell 10 bps sequentially to 21%, hurt by higher customer support costs & acquisition-related consolidation, which were partly set off by rupee depreciation and benefits from Project Maximus. While Infosys retained its FY27 Ebit margin guidance of 20-22%, it faces headwinds from the October/January wage hikes in H2.