Infosys Lowers FY27 Revenue Forecast Amid Q2 Profit Growth
Infosys revises its revenue growth expectations for FY27 to 1-2%, despite a 6.2% increase in Q2 net profit.
Infosys expects revenue growth of only 1-2% for FY27, down from previous estimates.
Q2 net profit rose to ₹7,828 crore, but fell short of analyst expectations.
AI revenues increased significantly, contributing 10.5% to total revenues.
Infosys, India's second-largest IT services company, has revised its revenue growth forecast for the fiscal year 2026-27, now projecting an increase of only 1-2% in constant currency. This adjustment comes as the company anticipates a slowdown in growth within its primary market, the United States, coupled with increasing deflationary pressures from advancements in artificial intelligence (AI).
In its latest financial report, Infosys announced a 6.2% rise in net profit for the second quarter, amounting to ₹7,828 crore, while revenues surged by 10.7% to ₹49,244 crore. Although revenue figures surpassed analyst predictions, net profit fell short of the anticipated ₹7,904 crore. This marks a period of slower growth for the company, which has not seen such a pace in at least six quarters.
The company’s performance was bolstered by strong contributions from its financial services and energy sectors. However, the overall outlook remains uncertain due to various factors, including reduced discretionary spending, sector-specific challenges, and a volatile economic environment. CEO Salil Parekh noted that the company is focusing on contracts that align with its economic guidelines, indicating a cautious approach moving forward.
Despite the challenges, there was a notable increase in AI-related revenues, which accounted for 10.5% of total revenues, a rise from 8.2% in the previous quarter. This segment is viewed as a significant growth opportunity, with Parekh highlighting a potential market worth $300 billion. However, the competitive landscape for large contracts remains fierce, which could impact profit margins.
Looking ahead, Infosys faces a challenging second half of the fiscal year, with anticipated wage hikes and continued pricing pressures. The company added 4,480 employees in the last quarter, bringing its total workforce to 332,542, with a voluntary attrition rate of 12.7%. As Infosys navigates these complexities, its ability to adapt and capitalize on emerging opportunities will be critical for sustaining growth.
