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Infosys cuts its growth forecast again despite $5.2 billion in large deals

India's second-largest software exporter now expects revenue to grow only 1% to 2% this year. September-quarter profit rose 6.2% to ₹7,823 crore, and its US-listed shares fell 8.5% before New York opened.

From the editorial desk · BengaluruPublished
Infosys campus in Bengaluru's Electronic City (file photo)
Infosys campus in Bengaluru's Electronic City (file photo)Photo: Zondor at English Wikipedia / Wikimedia Commons, CC BY-SA 3.0

Key points

  1. Infosys lowered its 2026-27 revenue growth forecast to 1% to 2% in constant currency, from 1.5% to 3%.
  2. Net profit rose 6.2% to ₹7,823 crore on revenue of ₹49,244 crore, up 10.7%.
  3. Large deals worth $5.2 billion were signed, including one of more than $2 billion.

Infosys cut its revenue forecast for the second quarter running on Friday. The Bengaluru company now expects sales to grow just 1% to 2% in constant currency in 2026-27, down from the 1.5% to 3% it set in July, and its shares in New York fell 8.5% in pre-market trade.

The September-quarter figures were close to what analysts had expected. Net profit rose 6.2% from a year earlier to ₹7,823 crore and was 0.7% higher than in the June quarter. Revenue from operations rose 10.7% to ₹49,244 crore. In dollars, revenue was $5.145 billion, up 1.5% from a year earlier and 1.2% from the previous quarter in constant currency. The operating margin held at 21%.

The company put the lower forecast down to a challenging demand environment.

Big deals, slow growth

The cut came in a strong quarter for orders. Infosys signed large deals worth $5.2 billion, 62% of it new business, against $3.6 billion in the June quarter.

“We had strong large deals of $5.2 billion, including a mega deal of over $2 billion,” said chief executive Salil Parekh.

Its artificial intelligence work is growing quickly from a small base. AI services made up 10.5% of revenue, up from 8.2% three months earlier. “Our AI revenue was at 10.5% and grew 29% quarter-on-quarter,” Parekh said.

Infosys kept its operating margin range for the year at 20% to 22%. “We delivered operating margins of 21.0% in Q2 amidst heightened volatility,” said chief financial officer Jayesh Sanghrajka. Free cash flow was $928 million, or 113.3% of net profit.

Dividend and hiring

The board declared an interim dividend of ₹26 a share, up from ₹23 a year ago. The record date is 3 November and the payout is due on 11 November.

The company added a net 4,480 employees in the quarter, taking its workforce to 332,542, after a small fall in the June quarter. Voluntary attrition in its IT services business eased to 12.7% from 13%.

A second cut in three months

In July, Infosys trimmed the top of its range from 3.5% to 3% and named Ashiss Kumar Dash, who joined the company in 1995, to take over from Parekh as chief executive on 1 April 2027. Parekh said then that the macro environment remained uncertain.

Friday’s cut takes the forecast lower still at both ends, and sets a cautious tone for the software sector after peers TCS, Wipro and Tech Mahindra reported earlier in the month. For the first half of the year, revenue grew 1.9% in constant currency to $10.23 billion and net profit rose 9% to ₹15,592 crore.

Indian investors get their first chance to react on Monday, 26 October, when trading resumes after the weekend. The Sensex closed Friday at 73,123.83, its fourth straight fall.