Infosys Cuts Its Fiscal 2027 Growth Guide to 1% to 2% Even as Large Deals Hit $5.2 Billion

Infosys reported fiscal second-quarter results on Friday, Oct. 23, for the quarter ended Sept. 30, 2026, with revenue of $5.145 billion, up 1.5% year over year in constant currency, net profit of 7,823 crore rupees, up 6.2%, and an operating margin of 21.0%, and cut its fiscal 2027 constant-currency revenue growth guidance to 1% to 2% from 1.5% to 3% even as large-deal wins reached $5.2 billion.

The cut lands at both ends of the range: the ceiling falls a full point, from 3% to 2%, and the floor slips from 1.5% to 1%, while the operating margin guidance was held at 20% to 22%. Against the settled consensus tally, revenue of 49,244 crore rupees edged past the 49,200 crore rupee estimate, a beat of 44 crore rupees on a TickerGrove calculation, but operating profit of 10,330 crore rupees missed the 10,470 crore rupee estimate by 140 crore rupees and net profit of 7,823 crore rupees missed the 7,917 crore rupee consensus by 94 crore rupees, both TickerGrove calculations. The operating margin of 21.0% was flat against a year earlier, a tenth of a point below the June quarter and below the 21.3% estimate, and management said second-half margins will be affected by pay increases, with pricing pressure from strong competition and client productivity demands also noted.

A $5.2 billion deal quarter, with a mega deal on top

The demand signal underneath the slower guide was the strongest in the print. Large-deal total contract value was $5.2 billion, with 62% net new, up from $3.6 billion in the first quarter, and the total included a mega deal of over $2 billion. AI revenue reached 10.5% of total revenue and grew 29% quarter on quarter, and nearly all of the big contracts signed in the period involve AI technology. “We had strong large deals of $5.2 billion, including a mega deal of over $2 billion, reinforcing our position as a trusted partner in the marketplace when clients embark on large and complex transformation programs. Our AI revenue was at 10.5% and grew 29% quarter-on-quarter,” Chief Executive and Managing Director Salil Parekh said. The split is the story: clients are signing large transformation programs now, while the revenue those programs produce converts slowly enough that the company still lowered the year’s growth range.

Rupee growth flatters the print; cash and the dividend hold up

The two growth rates describe different things and should not be mixed. Reported rupee revenue rose 10.7% to 49,244 crore rupees, but constant-currency growth was 1.5% and reported dollar revenue rose 1.3% to $5.15 billion — rupee weakness flatters the reported rupee line, it does not mark faster underlying demand. Basic earnings were 19.32 rupees a share, up 8.7% in rupee terms. Free cash flow was $928 million, or 8,898 crore rupees, representing 113.3% of net profit, down from $1.1 billion a year earlier, a decline of about 16% on a TickerGrove calculation. The board declared an interim dividend of 26 rupees a share, up 13% from 23 rupees a year earlier, with a record date of Nov. 3 and a payout date of Nov. 11. Underneath the total, life sciences revenue grew 32.5% in constant currency while hi-tech fell 17.3% and North America, at 54.6% of revenue, declined 1.5%, and total headcount stood at 332,542.

Infosys American depositary shares fell 6.3% to $12.40 in premarket trading on Friday, Oct. 23, after closing up 3.7% in the previous session. What to watch next is how much of the $2 billion-plus mega deal converts into second-half revenue, whether North America spending stabilizes, and whether the 20% to 22% margin range survives the second-half pay increases the company has already flagged.