Infosys faces FY27 guidance cut despite 11% Q2 revenue estimate

Infosys faces a possible FY27 revenue-guidance cut when it reports second-quarter results on Oct. 23, after an ETMarkets article on Oct. 22 cited brokerages expecting 11% year-on-year revenue growth.

For investors in India's IT outsourcing sector, the issue is whether Infosys can defend 20%-22% operating margins while revenue guidance may move below its current 1.5%-3% constant-currency range, which strips out exchange-rate effects.

ETMarkets said the average of seven brokerage estimates put July-September revenue at about 49,384 crore rupees, compared with 44,490 crore rupees in the same quarter a year earlier. One crore equals 10 million rupees, making the forecast about 493.84 billion rupees, according to Atlas360 calculations.

Net profit is expected to rise 8% year on year to 7,965 crore rupees from 7,375 crore rupees, the article said. That forecast equals about 79.65 billion rupees, according to Atlas360 calculations, giving international readers a clearer measure of scale.

Those forecasts are not Infosys's reported numbers. The company is scheduled to publish its second-quarter earnings on Friday, Oct. 23, giving investors management commentary on client spending, large contracts and the effect of artificial intelligence on traditional IT-services work.

The guidance question follows a prior reduction in Infosys's FY27 outlook. ETMarkets said the company had lowered the top end of its constant-currency revenue-growth guidance to 3% from 3.5% at its June-quarter results, while keeping the lower end at 1.5%.

Brokerage expectations reported by ETMarkets point to another cut, though the scale differs. Emkay Global expects Infosys to narrow FY27 revenue-growth guidance to 1.5%-2.5% and keep operating-margin guidance at 20%-22%. Kotak Institutional Equities also sees a 1.5%-2.5% range, citing weak demand and possible project delays, according to the article.

Jefferies has the lower forecast among the brokerages cited. It expects guidance to move to 0.5%-2%, a reduction of 100 basis points at both ends of the current range; a basis point is one-hundredth of a percentage point. Jefferies also expects Infosys to retain its 20%-22% margin guidance.

For the September quarter, brokerages expect sequential revenue growth, meaning growth compared with the immediately prior quarter, of 1.1%-1.3% in constant-currency terms. ETMarkets said estimates include support from acquisitions and the reversal of a revenue headwind from the June quarter.

Emkay expects dollar revenue to grow 1.5% sequentially, including a 50-basis-point contribution from the Optimum acquisition and a 20-basis-point cross-currency headwind, ETMarkets reported. Jefferies estimates 1.3% constant-currency growth, including a 60-basis-point acquisition contribution and a 50-basis-point benefit from the reversal of a client-termination impact. JM Financial expects 1.2% constant-currency growth, translating to about 1% growth in dollar terms after currency movements.

Margin expectations are more supportive than the revenue outlook. Emkay expects earnings before interest and tax margin to expand by 50 basis points sequentially, while Jefferies forecasts a 35-basis-point improvement and JM Financial expects a 30-basis-point increase, according to ETMarkets.

The forecasts reflect analysts' view that Infosys can improve profitability even as demand remains modest. JM Financial expects benefits from Project Maximus, Infosys's margin-improvement programme, and from the absence of higher costs linked to a client termination in the previous quarter, ETMarkets said.

Oct. 23 earnings checks

On Oct. 23, the first check is whether Infosys lowers FY27 constant-currency revenue guidance from its current 1.5%-3% range. Emkay Global and Kotak Institutional Equities expect a 1.5%-2.5% range, while Jefferies expects 0.5%-2%.

The second check is whether Infosys keeps its 20%-22% operating-margin guidance. The brokerages cited by ETMarkets expect that range to be retained even as they forecast weaker revenue guidance.

The third check is management's commentary on client spending, large deal wins and AI-related pricing pressure. Those comments will help investors assess whether the September-quarter forecasts reflect a temporary slowdown or a more durable demand issue.

Source: ETMarkets article, The Economic Times, Oct. 22, 2026