Guidance cut expected? Infosys may not have good news for investors in Q1 results

Infosys is expected to report double-digit growth in revenue and profit for the June quarter, though brokerages remain divided on whether the company will raise or cut its FY27 revenue growth guidance amid weak discretionary demand, AI-led pricing pressure and macro uncertainty in the US. The company's shares have been under pressure this year, eroding Rs 2.5 lakh crore of investor wealth.

The IT major is likely to report 15% year-on-year growth in revenue and 13% year-on-year growth in profit after tax for the quarter ended June 30, 2026, according to the average estimate of six brokerages. Sequential growth is expected to be helped by seasonality, more billing days and acquisition contribution from Optimum and Stratus. However, organic growth is expected to remain modest, showing that the demand recovery is still gradual.

Nuvama expects Infosys to report 2.3% quarter-on-quarter revenue growth in constant currency terms and 2.1% growth in dollar terms, including about 1% inorganic contribution from the early closure of Optimum. The brokerage expects EBIT margin to expand 30 basis points sequentially, helped by currency tailwind and lower provision for doubtful debt.


Nuvama also expects Infosys to raise its FY27 revenue growth guidance to 2.5-4% in constant currency terms from 1.5-3.5% earlier, driven by an incremental 1% contribution from acquisitions.

Nomura has a more cautious view. It expects revenue to grow 1.5% sequentially in constant currency terms, including 80 basis points of inorganic contribution, in a seasonally strong quarter. The brokerage said discretionary demand in financial services could improve modestly, but expects EBIT margin to decline 50 basis points quarter-on-quarter.

Nomura expects Infosys to retain its FY27 revenue growth guidance of 1.5-3.5% in constant currency terms on an organic basis, along with EBIT margin guidance of 20-22%.

Investors will watch management commentary on client discretionary spending, especially in the US, where macro volatility has affected decision-making. The market will also track the company’s comments on the impact of AI, the Middle East conflict, cost takeout projects and the BFSI vertical.

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Motilal Oswal expects Infosys to report about 2% sequential revenue growth in constant currency terms, of which organic growth may be around 1%. The brokerage said growth will be supported by a two-month contribution from Optimum and Stratus.

It expects operating margin to improve by about 40 basis points sequentially to 21.4%, aided by the absence of wage hikes in the first quarter, reversal of visa-related costs incurred in the March quarter and continued benefits from Project Maximus.

Motilal Oswal expects US BFSI to remain resilient, while telecom and manufacturing may stay weak because of client-specific issues and the Daimler ramp-down. However, it expects Infosys to lower the upper end of FY27 revenue growth guidance by 50 basis points to 1.5-3% in constant currency terms.

Systematix expects constant currency revenue to grow 1.7% sequentially, led by a two-month contribution from acquisitions. It expects EBIT margin to decline 10 basis points because of investments, partly offset by currency tailwinds. The brokerage said Infosys may raise the lower end of its constant-currency revenue growth guidance to 2.5-3.5%, including M&A contribution. It expects deal total contract value to be around $3-3.5 billion.

Kotak Equities expects organic revenue growth of 0.9% sequentially, helped by seasonal strength and additional billing days. It said growth is likely to be weaker than the historical average due to macro uncertainty and AI deflation headwinds.

The brokerage expects margins to remain stable, with rupee depreciation benefits offset by additional costs related to acquisitions. It expects large deal TCV of $2.5-2.75 billion, broadly stable year-on-year.

Kotak expects Infosys to revise annual revenue growth guidance to 2-3.5% from 1.5-3.5% earlier. The revised guidance is expected to include Optimum Healthcare, which may add 120 basis points to revenue. EBIT margin guidance is expected to remain unchanged at 20-22%.

Morgan Stanley expects Infosys to tighten its FY27 guidance band to 2-3.5%, including one percentage point from inorganic activity. On a like-for-like basis, this would imply guidance of 1-2.5%, compared with 1.5-3.5% earlier. The brokerage expects Infosys to lower the revenue growth guidance range for FY27, while maintaining the margin guidance band. It also said large deal wins could be tepid because of delayed decision-making by clients.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)