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American Depositary Receipts (ADRs) of Infosys fell 8% in pre-market trading on Friday, October 23, after the Bengaluru-based IT services provider lowered its full-year revenue growth guidance for FY27, citing subdued volumes, pricing pressure and continued uncertainty.
Infosys ADRs were quoting at $12.15 at 8:16 am EDT, down 8% from the previous close of $13.22.
India's second-largest IT services company now expects revenue growth of 1–2% for FY27, compared with its earlier projection of 1.5–3%. The company maintained its EBIT margin guidance at 20–22%.
The revised outlook came despite quarterly revenue broadly meeting analyst expectations, with the company reporting sequential growth in dollar and constant currency terms.
Infosys reported revenue of $5,145 million in US dollar terms for the second quarter, compared with the CNBC-TV18 poll estimate of $5,151 million. Revenue grew 1.3% sequentially.
The company reported constant currency revenue growth of 1.2% sequentially, against the Street's expectation of 1.4%.
EBIT stood at ₹10,330 crore, up 1.6% sequentially, compared with the CNBC-TV18 poll estimate of ₹10,470 crore. EBIT margin came in at 21%, against 21.1% in the June quarter and the poll estimate of 21.3%.
Why Infosys cut its FY27 revenue guidance
Speaking to CNBC-TV18 after the results, CFO Jayesh Sanghrajka said the lower revenue growth guidance reflected a softer second quarter, subdued volumes, pricing pressure amid competitive intensity and higher productivity expectations.
Weakness in the retail and high-tech sectors, where discretionary spending has been lower than expected, has also weighed on the revenue outlook.
Sanghrajka said the company had maintained its operating margin at 21%, supported by cost-efficiency measures under Project Maximus, despite continued investments in sales, marketing, AI and talent.
Explaining the margin movement, he cited a 70-basis-point impact from post-sale customer support and a 20-basis-point impact from acquisitions. These were offset by a 40-basis-point benefit from currency movements, a 20-basis-point contribution from higher calendar and working days, and a 20-basis-point contribution from Project Maximus.
Looking ahead, employee compensation costs and continued pricing pressure are expected to weigh on margins in the second half of the financial year. Sanghrajka said the company would continue to use Project Maximus to offset some of these headwinds.
Shares of Infosys ended nearly flat on the NSE on Friday, October 23, rising 0.04% to ₹1,153.80. The stock gained around 13.1% over the past month but remained down 29.2% so far this year.
Also Read: Infosys management speaks to CNBC-TV18 after Q2 results: Here are the top takeaways
