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After HCL Technologies, Infosys also let down the Street with weaker-than-anticipated FY27 revenue growth guidance, reinforcing concerns about a slowing IT cycle.
The stock fell over 5% on Friday, sliding to a new 52-week low of ₹1,167.80. Revenue guidance from large IT firms tends to set the tone for investor expectations for the sector.
Geo-political conflicts and AI-led deflation are likely dampeners to growth in FY27, reflected in Infosys’s underwhelming revenue guidance of 1.5%-3.5% CC (1.25–3.25% in organic CC). CC is constant currency.
The guidance factors in a 75-100 basis points (bps) impact from a planned ramp-down with a European client (Daimler) and a change in onsite mix. While it includes the impact of the Stratus acquisition, the Optimum Healthcare deal and Versent joint venture are excluded.
Infosys’s guidance suggests AI is beginning to compress the existing book of business.
“While part of this is attributable to competitive intensity and pricing in a low-demand environment, we expect the impact of deflation to continue as AI productivity benefits are passed on to clients,” said Motilal Oswal Financial Services in a report dated 23 April.
Motilal expects Infosys to grow at the mid-point of FY27 guidance (about 2.5% organic), marking a deceleration versus FY26 CC revenue growth of 3.1%.
Sequential CC revenue fell 1.3% in the March quarter (Q4FY26), against consensus estimates of a 0.6% drop, hurt by seasonality and delays in client decision-making, particularly in March.
Segment-wise, weakness was led by manufacturing, financial services and retail.
Infosys expects H1FY27 to be stronger than H2, factoring in normal seasonality, with BFSI and Europe likely to see an acceleration in revenue growth aided by healthy deal wins.
Large deal wins in Q4 stood at $3.2 billion, down 33% sequentially, comprising 19 deals with a net-new component of around 40%.
For FY26, large deal total contract value rose around 24% year-on-year to $14.9 billion, with a net-new mix of around 55%, taking the total number of large deals to 96 for the year.
Yet, robust deal wins are not translating into sharp revenue growth—a problem many IT companies have faced lately amid persistent client caution.
Infosys said discretionary IT spend remains constrained across most verticals. However, non-discretionary spending is increasingly AI-led, with clients seeking productivity savings.
Infosys expects to see deflation in existing services.
Infosys’s FY27 guidance reiterates the seriousness of AI-led deflation and this could just be the beginning of what’s to come, cautioned Nirmal Bang Institutional Securities.
HCL, too, had called out that its service line is less exposed to GenAI deflation, with around 2–3% drag on its revenues. It estimates a higher drag of 3–5% for the industry over four–five years, implying 15–20% of revenues at risk.
HCL’s FY27 CC revenue guidance of 1–4% and Wipro’s Q1FY27 sequential CC guidance of -2-0% also upset the Street. Tata Consultancy Services does not provide guidance.
Infosys’ margins remained stable at around 21% in FY26, with benefits from currency and Project Maximus being reinvested into AI capabilities and talent.
Its FY27 margin guidance of 20–22% factors in headwinds from wage hikes, AI productivity pass-through, and acquisition impact, partly offset by efficiency initiatives.
Infosys stock has plummeted 28% so far in 2026, dragging the Nifty IT index down 24%.
JM Financial Institutional Securities noted that the read-through from the top six Indian IT results so far is that industry growth in FY27 is likely to be lower than expectations at the start of the quarter.
Heightened competition and AI deflation impact are visible across companies, in addition to macro uncertainty, it said in a 23 April report.
Harsha Jethmalani is a Deputy Editor at Mint with over a decade of experience covering stock markets and corporate India. As a key member of the Mark to Market team, she specializes in delivering cutting-edge commentary on market trends, the economy, and corporate financial reports.Born and raised in Mumbai, Harsha’s entry into business journalism was a serendipitous pivot. Graduating during the 2008–2009 financial crisis, her initial goal of becoming a research analyst at an MNC was rerouted. However, what began as a chance career move quickly became a conscious choice; she discovered that financial journalism is a powerful storytelling tool capable of influencing and empowering the financial decisions of a massive audience.Harsha began her career in 2009 at IRIS Business Services (Myiris.com), tracking mutual funds and interviewing fund managers. In 2011, she joined the Network18 Group, writing extensively on equity market trends for Moneycontrol.com and hosting pre- and post-market audio updates. Following a stint covering personal finance at Dalal Times, she joined Mint in 2016 as a Content Producer, steadily rising through the ranks to her current editorial position.A defining highlight of her tenure at Mint was her extensive coverage of India's historic Goods and Services Tax (GST) reform. She chronicled the massive indirect tax overhaul from its initial conceptual and execution hurdles to its eventual streamlining. Her impactful reporting earned official recognition when her article exposing a spike in gold smuggling ahead of the GST rollout was formally acknowledged by the Office of the Director General of Audit (Central), Kolkata. Currently, Harsha closely tracks the IT, cement, real estate, and paint sectors. Her sharp news sense and ability to spot emerging trends consistently bring fresh, actionable perspectives to market analysis.She holds a postgraduate degree in financial markets from Indira Gandhi National Open University and a Bachelor of Management Studies from Vivekanand Education Society, Chembur, Mumbai.