Infosys cuts FY27 growth guidance to 1-2% amid weak demand environment

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Net profit rose 6.2 per cent y-o-y and 0.7 per cent quarter-on-quarter to ₹7,823 crore.

By Sanjana B

Updated - October 23, 2026 at 09:45 PM. | Bengaluru

The company reported revenue of ₹49,244 crore in the September quarter, up 1.5 per cent year-on-year and 1.2 per cent sequentially in CC terms

Infosys is seeing rapid growth in AI revenue, but the momentum is yet to translate into stronger overall growth, prompting the company to cut its FY27 revenue guidance significantly.

The IT giant has cut its FY27 revenue growth guidance to 1-2 per cent in constant currency (CC) terms, down from last quarter’s 1.5-3 per cent CC growth guidance.

The company reported revenue of ₹49,244 crore in the September quarter, up 1.5 per cent year-on-year (y-o-y) and 1.2 per cent sequentially in CC terms. Net profit rose 6.2 per cent y-o-y and 0.7 per cent quarter-on-quarter to ₹7,823 crore.

“We called out 1.5 per cent in our previous guidance, and we expect more uncertainty. Q2 has been softer, and our volume continues to remain soft. We have also seen pricing pressure due to competitive intensity and higher asks on productivity. On top of that, in some sectors — software, city, retail, hi-tech — the discretionary spending is lower than our expectations. All of this is reflected in our guidance,” said CFO Jayesh Sanghrajka.

Margin flat

He said that the company’s operating margin remained flat at 21 per cent, with a 70-basis-point (bps) impact from wholesale customer support costs and 20 bps from acquisitions offset by 40 bps from currency, 20 bps from additional working days and 20 bps from Project Maximus. The company flagged higher compensation costs and continued pricing pressure as margin headwinds in the second half of the year.

Infosys highlighted that AI-related revenue accounted for 10.5 per cent of the company’s total revenue and is growing at 29 per cent quarter-on-quarter.

“The more critical element is AI growth. It is a secular trend, and we are seeing it grow quickly. Despite some volatility, we expect this strong pace of growth to continue over the next several quarters,” said Salil Parekh, CEO and MD.

Gaurav Vasu, CEO and Founder, UnearthInsight, noted that the company’s Q2 results are modest, with slow revenue growth and flat margins.

“Revision of guidance indicates that demand hasn’t picked up in North America as tech spend moves towards AI players. Even though the share of AI revenue is up to 10 per cent, it’s not reflecting in higher growth or margins, or revenue per employee,” he noted.

Published on October 23, 2026

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