The country’s second largest IT services firm, Infosys on Thursday lowered the lower end of its FY27 revenue growth guidance to 1.5%–3.5% in constant currency from 3%–3.5% in FY26, pointing to continued demand caution amid global uncertainties and a moderate impact from AI-led deflation. The reset comes even as the company reported a sequential rise in profit and revenue for the January–March quarter, both ahead of Bloomberg estimates. The guidance, now below the range many on the Street were factoring in, suggests that discretionary spending remains weak and conversion cycles for large deals continue to be elongated across key markets.
Infosys’ ADRs fell about 5% in pre-market trading following the announcement, indicating investor concern over the softer FY27 growth guidance despite the Q4 earnings beat. The company’s shares on the BSE closed down 2.04% at Rs 1242.60. The company’s announced the results post closing of trading hours.
The more conservative outlook also mirrors commentary from peers in recent quarters, where large IT services firms have flagged slower decision-making and limited visibility on ramp-ups. While pockets such as financial services and energy are expected to show some traction, the broader demand environment remains uneven, with clients reprioritising spends towards cost optimisation and selective AI-led deployments. The sector has also been contending with the possibility of AI-driven efficiencies compressing traditional services revenue even as new AI opportunities scale up gradually.
Financial Resilience
For the fourth quarter, net profit rose 27.8% quarter-on-quarter to Rs 8,501 crore from Rs 6,654 crore, beating Bloomberg estimates of Rs 7,496 crore. Revenue from operations increased 2% sequentially to Rs 46,402 crore from Rs 45,479 crore, marginally above estimates of Rs 46,135 crore. Earnings before interest and tax (Ebit) stood at Rs 9,743 crore, up 16.6% on a quarterly basis and higher than estimates of Rs 9,565 crore. Ebit margin expanded to 21% from 18.4% in the preceding quarter. The company maintained its operating margin guidance for FY27 at 20%–22%. Infosys also met its FY26 revenue growth guidance, posting 3.1% year-on-year growth in constant currency.
Chief Executive Officer Salil Parekh said the company expects financial services and energy, utilities, resources and services segments to accelerate in the coming quarter, even as demand for AI services expands. “The simplicity and strength of our AI services strategy across six areas is gaining traction in the market further strengthened by strong ecosystem AI partnerships enabling clients to get value from AI,” he said. Parekh added that AI-led revenue, which was 5.5% of total revenue in the third quarter of FY26, is now growing at a much faster pace, although the company did not disclose the exact contribution for the latest quarter.
Deal Pipeline
Total contract value (TCV) of large deals stood at $3.2 billion in the quarter, taking the full-year tally to $14.9 billion. Parekh said the company signed multiple large deals in Europe, including a major manufacturing contract and one with the NHS, while geographies such as Japan also performed well. “We signed multiple large deals in Europe including one of the biggest manufacturing contracts and the NHS deal which contributed to growth. Some of the geographies like Japan are also doing quite well,” he said. At the same time, he flagged risks to the manufacturing vertical, particularly automotive, from geopolitical tensions in West Asia.
Despite pressures, the company said net new large deals accounted for 55% of total deal wins for the full year, supporting growth visibility. Infosys also said its acquisition of Stratus has been closed and factored into guidance, while deals for Optimum and Versant remain subject to regulatory approvals. Margins absorbed a 50 basis point impact from the Stratus acquisition during the quarter. The board proposed a final dividend of Rs 25 per share, taking total capital return for FY26, including interim dividend and buyback, to over Rs 37,500 crore. Geographically, North America contributed 55.7% of revenue, followed by Europe at 32.6%, with the rest of the world and India accounting for 9.1% and 2.6%, respectively.