Infosys, India’s second-largest IT services company by market cap, is scheduled to announce its Q1FY27 results on July 23. After its peers – TCS, Wipro and HCLTech reported stable first-quarter earnings and faced pressure on their margins, all eyes are now on Infosys if the tech major will be able to beat estimates?
Here are 5 key factors to watch out for
1. Infosys’ FY27 revenue growth guidance in focus
Infosys is expected to lower the upper end of FY27 revenue growth guidance by 50 basis points (bps) to 1.5–3.0% YoY CC, according to Motilal Oswal.
Another brokerage firm, Kotak expects Infosys to raise its FY27 revenue growth guidance to 2-3.5% in constant currency from the earlier 1.5-3.5%. The revised outlook is expected to include the impact of the Optimum Healthcare acquisition, which the brokerage estimates will add around 120 basis points to revenue growth.
2. Infosys Q1FY27: Steady revenue expected
Infosys is expected to report around 2% sequential revenue growth in constant currency (CC) in Q1FY27, with about 1% coming from its core business. Motilal Oswal expects said the rest of the growth is likely to come from the recent acquisitions of Optimum and Stratus, which contributed for two months during the quarter. “Growth remains H1-heavy as in prior years,” Motilal Oswal noted.
3. Infosys Q1FY27: AI and Middle East impact in focus
Infosys’ growth is likely to remain below historical averages due to macroeconomic uncertainty and pricing pressure from artificial intelligence (AI), according to Kotak Institutional Equities.
The brokerage expects Infosys to post 0.9% organic revenue growth in constant currency (CC) in Q1FY27, supported by seasonal strength and a higher number of billing days.
4. Infosys Q1FY27 Preview: Margins in focus
Margins of IT sector companies were expected to remain under pressure due to salary hike effective from April. However, according to Motilal Oswal, “Operating margin is expected to improve approximately 40 basis points quarter-on-quarter (QoQ) to approximately 21.4%, aided by the absence of wage hikes in Q1, reversal of visa-related costs incurred in Q4, and continued Project Maximus-led cost efficiencies.”
5. Infosys Q1FY27 deal TCV expected to be unchanged
Infosys is expected to report large deal wins worth $2.5-2.75 billion in Q1FY27, broadly unchanged from a year ago, according to Kotak.
Motilal Oswal noted, “US BFSI is expected to remain resilient, while telecom and manufacturing may stay weak due to client-specific issues, the Daimler ramp-down.”
Conclusion
Overall, most analysts expect a rather muted quarter for Infosys with margin pressure due to salary hike. However, the most important detail that the street will watch out for is the guidance for FY27 as that will give the street an overall idea of the expectation on future demand.
At financialexpress.com, we will bring you live updates on Infosys’ Q1FY27 financial report, brokerage analysis, management commentary and outlook for FY27.
