Infosys Shares Decline Following Q2 Miss and Guidance Cut

Infosys shares dropped over 3.5 per cent on Monday, trading as low as ₹1,109.70 on the BSE, following the company's second-quarter earnings report. Bengaluru-based Infosys posted a 6.2 per cent rise in net profit to ₹7,828 crore and a 10.7 per cent revenue increase to ₹49,244 crore. However, these figures missed analyst expectations, which had predicted a net profit of ₹7,904 crore and revenue of ₹49,108 crore. The company subsequently reduced its FY27 revenue growth guidance to 1-2 per cent year-on-year, down from the previous range of 1.5-3.0 per cent.

So far this year, Infosys shares have remained 31 per cent lower, reflecting a broader selloff in traditional IT services driven by fears of AI-led deflation. Analysts at Motilal Oswal Financial Services (MOFSL) noted that competitive intensity and wage hikes are weighing on margins. While maintaining a 'BUY' rating with a target price of ₹1,300, MOFSL trimmed its EPS estimates by up to 2 per cent. Emkay Global also reduced its EPS estimates, citing the Q2 miss and guidance cut, while retaining a target price of ₹1,300.

Conversely, Antique Stock Broking highlighted a silver lining in the form of $5.2 billion in large-deal total contract value (TCV), which surpassed its estimate of $4 billion. This included a seven-year mega deal worth over $2 billion with a financial services client. Despite this, they maintained a 'HOLD' rating with a target price of ₹1,115, citing the guidance cut as a near-term headwind.

What to watch: Future deal conversion rates and the impact of AI-led productivity deflation on long-term margins.

Editor's note: The report accurately summarizes the financial performance, analyst outlook, and market context provided in the text.