Infosys' June quarter of financial year 2027 (Q1FY27) earnings may have largely met expectations, but it was the company's lower full-year growth outlook — not the quarterly numbers — that dominated brokerage commentary.
While analysts acknowledged resilient deal wins, improving AI traction and an orderly CEO succession plan, the sharp reduction in the upper end of FY27 revenue guidance reinforced concerns that demand recovery remains elusive amid a challenging macro environment.
Brokerages Decode
Morgan Stanley
- Maintained Equal-weight and cut the target price to Rs 1,075 from Rs 1,112.
- Said the quarter was "worse than feared."
- Believes the sharp reduction in FY27 guidance could reflect Infosys-specific challenges.
- Added that industry-wide growth has become more challenging, with FY27 likely to see weaker growth and margin pressure, affecting earnings growth.
- Noted that deal wins remained strong and the company continues to make progress in AI services.
- Said investors are likely to monitor a smooth CEO transition.
BofA
- Maintained Buy and cut the target price to Rs 1,300 from Rs 1,570.
- Said the June quarter requires a stronger performance in the remainder of FY27.
- Highlighted good execution in AI and profitability.
- Noted that new deal wins improved meaningfully from the previous quarter.
Jefferies
- Maintained Hold and cut the target price to Rs 1,020 from Rs 1,235.
- Said the worsening growth outlook is now increasingly reflected in the stock price.
- Believes the appointment of a CEO-designate could provide comfort around leadership transition.
- Cut earnings estimates by 1-3% and expects Infosys to deliver a 5% recurring EPS CAGR.
Infosys Q1 Results
Infosys reported 3.9% sequential growth in revenue to Rs 48,211 crore, while earnings before interest, tax (EBIT) rose 4.3% to Rs 10,163 crore. EBIT margin expanded marginally by 8 basis points to 21.08%, although net profit declined 8.6% quarter-on-quarter (QoQ) to Rs 7,769 crore.
The company narrowed its FY27 revenue growth guidance to 1.5%-3% from 1.5%-3.5%, with the reduction in the upper end becoming one of the key talking points for analysts.
Infosys also reported AI revenue of $417 million, accounting for 8.2% of quarterly revenue, compared with 5.5% reported during its AI Day earlier this year, becoming the third large-cap Indian IT company after HCLTech and TCS to disclose AI revenue.
Large deal total contract value increased to $3.6 billion from $3.2 billion in the previous quarter, while constant currency revenue growth came in at 1%, in line with expectations.
The board appointed Ashiss Kumar Dash as CEO-designate. A 31-year Infosys veteran, Dash will take over as Chief Executive Officer and Managing Director from April 1, 2027. Chairman Nandan Nilekani described him as someone who has "worked in every part of Infosys," while CEO Salil Parekh said Dash has built extensive experience across clients and people leadership.
During the earnings call, management said AI-related work continues to accelerate, with clients increasingly optimising token costs. However, it cautioned that macroeconomic conditions remain uncertain, with discretionary spending still constrained.
The company also flagged continued weakness in the communications and retail verticals, while noting that financial services is expected to outgrow the company average.
It added that tariff-related uncertainty has resulted in controlled client budgets, while demand weakness in Europe has intensified beyond earlier expectations, creating an additional headwind.
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