India's Infosys falls after cutting revenue growth forecast for fiscal 2027

Oct 26 : Shares of IT firm Infosys fell 2.7 per cent in early trading on Monday after the company cut its fiscal 2027 revenue growth forecast more than expected and reported weakness in its North America business. 

The company cut its fiscal 2027 revenue growth forecast to 1 per cent-2 per cent from 1.5 per cent-3 per cent, while most analysts had ​expected it to trim only the upper end of the range to 2.5 per cent.

Shares were last trading 1.4 per cent lower at 1,138 rupees as of 9:32 a.m. IST. The Nifty IT index was down 0.7 per cent while the benchmark Nifty 50 index was down 0.7 per cent.

The firm was the last of the top 5 to report earnings for the Indian IT sector. Earlier this month, peers Tata Consultancy Services and HCLTech met revenue estimates with modest margin performance, but investors cheered the uptick in AI revenue.

Systematix analysts called it a "disappointing quarter", highlighting pricing pressure from heightened competition and client productivity demands on account of AI, and subdued tech spending among retail and high-tech clients.

The investment research firm reduced its fair value estimate to 1,150 rupees from 1,200 rupees to reflect the underperformance.

Brokerage Motilal Oswal said weaker volumes, smaller-than-expected price increases, a shift toward offshore delivery and Infosys' decision to exit a large European manufacturing contract had weighed on growth.

The brokerage expects EBIT margins of 21 per cent in fiscal 2027 and fiscal 2028, and said margins were likely to remain range-bound over the medium term. 

TD Cowen said macroeconomic uncertainty, AI-led productivity demands, and heightened competition have hurt pricing and volumes, while seasonal weakness and client ramp-downs could weigh on second-half growth.

The investment research firm reduced its fair value estimate to 1,150 rupees from ​1,200 rupees to reflect the underperformance.

Analysts rate the stock "Buy" on average, with a median price target of 1,180 rupees, according to data compiled by LSEG.