Infosys cuts its FY27 growth outlook despite strong AI revenue and large deal wins

The quarter in numbers

Infosys reported its results on 23 October 2026 for the second quarter of FY27, covering July to September 2026. Consolidated revenue from operations was ₹49,244 crore, up 10.7% year on year in reported rupee terms, while constant-currency revenue growth, which strips out exchange-rate movements, was 1.5% year on year and 1.2% sequentially. Consolidated net profit was ₹7,823 crore, up 6.2% from ₹7,364 crore a year earlier and nearly flat against ₹7,769 crore in the previous quarter.

The operating margin for the quarter was 21%, matching the year-ago level, according to reporting of the results. The company attributed that stability to cost management and operational efficiency alongside continued investment. For the first half of FY27, revenue was ₹97,454 crore, up 12.3% in reported rupee terms, with constant-currency growth of 1.9% year on year. Those half-year figures give context to the full-year forecast: growth so far has been modest in constant-currency terms, even though reported rupee revenue has risen more strongly.

Why the guidance cut matters more than the headline profit

Guidance is a company's own forecast for the future, not a result that has already happened. Infosys revised its FY27 constant-currency revenue growth guidance to 1–2%, down from 1.5–3%, while retaining its operating margin guidance at 20–22%. Reporting of the results links the more cautious outlook to limited near-term visibility on a broad-based demand recovery, with enterprises in key markets still rationalising discretionary technology spending. A lower forecast therefore signals caution about the pace of revenue conversion, not a collapse in the business.

That caution sits alongside two stronger indicators. Large deal total contract value was $5.2 billion in the quarter, of which 62% was net new business, including a mega deal worth more than $2 billion. Artificial intelligence revenue accounted for 10.5% of quarterly revenue and grew 29% quarter on quarter, according to the company. The contrast is the point of the results: a growing AI business and a large deal pipeline have not yet translated into faster overall revenue growth, partly because AI-linked pricing and productivity demands can put pressure on traditional billing models, as reporting of the results notes.

What else shareholders were told

The board declared an interim dividend of ₹26 per equity share, up from ₹23 in the corresponding period last year, with 3 November 2026 as the record date and 11 November 2026 as the payment date. Free cash flow for the quarter was $928 million, or ₹8,898 crore, down 8.1% year on year, while the company reported free cash flow of ₹17,949 crore for the first half, up 4.3%. Total headcount was 332,542 at 30 September 2026, compared with 328,062 at the end of June, and voluntary attrition over the trailing twelve months eased to 12.7%, from 13% in the previous quarter.

Segment reporting showed an uneven quarter. Life sciences was the fastest-growing segment in reported terms, while manufacturing and retail declined and hi-tech recorded the steepest contraction, according to reporting of the results. North America remained the largest market at 54.6% of revenue, although reported revenue from the region fell 1.6% year on year, while Europe grew 3.9%. None of this is investment advice: a guidance cut is a forecast revision, and it does not by itself predict a share price movement, which depends on future results, valuations and wider market conditions.

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