Infosys shares declined as much as 4% on October 26, 2026, after India’s second-largest IT services company lowered its revenue growth guidance for the financial year ending March 2027. The company reduced its constant-currency revenue growth forecast to 1%–2%, compared with its earlier range of 1.5%–3%, citing pricing pressure, intensifying competition and softer-than-expected volume growth.
The guidance reduction has prompted mixed reactions from brokerages. Goldman Sachs and Citi remain cautious about the near-term growth outlook, while Nomura and Motilal Oswal continue to see potential upside. Nuvama has downgraded the stock to Hold, highlighting concerns about a weak second half and the possibility of subdued growth continuing into FY28. The debate now centers on whether strong deal wins and AI-related opportunities can offset pressure on organic growth and contract pricing.
Key Takeaways
- Share price: Infosys fell as much as 4% to ₹1,107 on the NSE on October 26.
- Lower guidance: FY27 constant-currency revenue growth guidance was cut to 1%–2% from 1.5%–3%.
- Q2 performance: Revenue rose 11% year over year to ₹49,244 crore, while net profit increased 6% to ₹7,823 crore, according to the company’s reported figures.
- Margins: Infosys retained its FY27 operating margin guidance of 20%–22%.
- Brokerage split: Nomura and Motilal Oswal maintained Buy ratings, while Goldman Sachs and Citi retained Neutral ratings. Nuvama downgraded the stock to Hold.
- Key concern: Pricing pressure, cautious client spending and softer organic growth could limit the near-term recovery.
Why Did Infosys Shares Fall?
The immediate trigger was the reduction in Infosys’ FY27 revenue growth forecast. The revised range indicates that management expects a more challenging business environment than it had anticipated earlier in the year.
The company attributed the change to increased competitive intensity, lower-than-expected price increases on contracts and weaker volume growth in the second quarter. Clients are also seeking to capture productivity benefits from artificial intelligence, putting pressure on the prices they are willing to pay for technology services.
Infosys shares fell to an intraday low of ₹1,107 on October 26, according to The Economic Times. The decline followed the company’s Q2 FY27 results and its revised outlook.
A lower forecast can affect a stock even when reported revenue and profits are growing. Investors value IT services companies partly on their ability to generate predictable growth over several quarters. When management reduces its expectations, analysts may revise future revenue, earnings and valuation estimates.
Infosys Q2 FY27 Results: Revenue and Profit
Infosys reported higher revenue and net profit compared with the year-ago quarter, but the outlook disappointed investors.
| Financial metric | Q2 FY27 reported figure | Year-on-year change |
|---|---|---|
| Revenue from operations | ₹49,244 crore | +11% |
| Consolidated net profit | ₹7,823 crore | +6% |
| FY27 revenue growth guidance | 1%–2% | Reduced from 1.5%–3% |
| FY27 operating margin guidance | 20%–22% | Unchanged |
Source: The Economic Times’ October 26 report. Figures are rounded where applicable.
The distinction between reported growth and future guidance is important. Infosys can increase revenue and profit in a particular quarter while still expecting slower growth across the full financial year.
Investors are also watching whether large deals translate into revenue quickly enough to offset weaker demand from existing clients. Strong contract bookings may support future business, but they do not immediately eliminate the effects of lower pricing or delayed project ramp-ups.
What Are Goldman Sachs, Nomura and Other Brokerages Saying?
Brokerages have reached different conclusions about the stock because they disagree on the balance between near-term weakness, valuation and future deal conversion.
The following table summarizes ratings and target prices reported on October 26, 2026. These are brokerage estimates, not guaranteed future prices.
| Brokerage | Rating | Reported target price | Key argument |
|---|---|---|---|
| Goldman Sachs | Neutral | ₹1,000 | Guidance cuts and weak organic growth visibility remain concerns |
| Nomura | Buy | ₹1,300 | Valuation and deal wins support the investment case |
| Morgan Stanley | Equal-Weight | ₹1,075 | Recovery depends on converting large deals into revenue |
| Citi | Neutral | ₹1,105 | Cautious client spending and pricing pressure limit growth |
| Nuvama Institutional Equities | Hold | ₹1,200 | Weak near-term growth and a softer FY28 outlook |
| Motilal Oswal | Buy | ₹1,300 | Strong bookings and AI adoption could support a recovery |
| UBS | Buy | ₹1,415 | Reported as the highest target among the brokerages covered by Business Upturn |
Sources: The Economic Times, Financial Express and Business Upturn.
Target prices can differ because analysts use different earnings forecasts, valuation methods and assumptions about future growth. The ratings should therefore be read alongside each brokerage’s reasoning rather than treated as a single market consensus.
Goldman Sachs: Neutral on Infosys
Goldman Sachs retained its Neutral rating and a reported target price of ₹1,000. The brokerage views the second consecutive reduction in FY27 guidance as evidence of continued weakness in revenue visibility.
The revised guidance midpoint also suggests modestly negative organic revenue growth after accounting for acquisitions. Client-specific ramp-downs, subdued volumes and changing spending priorities could weigh on the business.
Goldman Sachs sees limited scope for a stronger earnings outlook until demand and pricing conditions improve.
Nomura: Buy Rating Maintained
Nomura retained its Buy rating with a reported target price of ₹1,300. The brokerage acknowledged the weaker outlook but considers Infosys’ valuation and strong deal wins supportive of the longer-term investment case.
Nomura also highlighted the company’s disciplined approach to pricing contracts. While this can constrain near-term growth, accepting business at uneconomic prices could create longer-term profitability problems.
Morgan Stanley and Citi: Cautious Outlook
Morgan Stanley maintained its Equal-Weight rating, while Citi retained its Neutral rating. Both brokerages highlighted the challenge of converting large deal wins into reported revenue while clients remain cautious about discretionary spending.
AI-driven productivity gains are another pressure point. Customers increasingly expect technology providers to deliver more work at lower cost, potentially reducing revenue growth even when projects continue.
Nuvama: Downgrades to Hold
Nuvama downgraded Infosys to Hold, with a reported target price of ₹1,200. Its concerns include the guidance reduction, a potentially weak second-half exit rate and the possibility that subdued growth could continue into FY28.
This view reflects the risk that the slowdown may not be limited to one quarter.
How AI Is Affecting Infosys’ Business
Artificial intelligence presents both an opportunity and a challenge for IT services companies.
On one hand, businesses are spending on AI adoption, cloud modernization and automation. These projects could create new consulting, implementation and managed-services opportunities for Infosys.
On the other hand, AI tools can help developers and service providers complete certain tasks more efficiently. Clients may expect those productivity gains to translate into lower contract prices, reducing revenue per unit of work.
For Infosys, the commercial challenge is to capture enough new AI-related business to offset pricing pressure in existing services. Deal wins are encouraging, but the timing of project execution and revenue recognition will determine how quickly they improve reported growth.
What Investors Should Watch Next
Several indicators will help investors assess whether the slowdown is temporary or more persistent:
- Revenue guidance: Whether Infosys can deliver growth within its revised 1%–2% range.
- Organic growth: Whether revenue from existing business stabilizes after accounting for acquisitions.
- Large deal conversion: How quickly new contracts translate into billable work and reported revenue.
- Operating margins: Whether the company can remain within its 20%–22% guidance despite pricing and wage pressures.
- AI-related demand: Whether new AI projects generate enough incremental business to offset productivity-related pricing reductions.
- Client spending: Whether discretionary technology budgets improve in the coming quarters.
The stock’s reaction will depend not only on the next reported quarter but also on whether management can provide evidence that demand and pricing conditions are stabilizing.
The Bigger Picture
Infosys’ guidance cut reflects a wider challenge facing India’s IT services industry. Clients continue to invest in digital transformation and AI, but they are also demanding greater productivity, tighter pricing and clearer returns on technology spending. This combination can create opportunities for service providers while limiting traditional revenue growth.
For investors, the key question is whether AI will expand the overall market for technology services quickly enough to compensate for pricing pressure on established business lines. Strong deal bookings and new AI offerings may support future growth, but execution, client demand and margins will determine how much of that opportunity reaches earnings.
FAQs
1. Why did Infosys shares fall on October 26, 2026?
Infosys shares fell as much as 4% after the company cut its FY27 constant-currency revenue growth guidance to 1%–2% from 1.5%–3%. The reduction raised concerns about demand, contract pricing and organic growth.
2. What is Infosys’ new FY27 revenue growth guidance?
Infosys lowered its FY27 constant-currency revenue growth guidance to 1%–2%. It had previously guided for growth of 1.5%–3%.
3. What is Goldman Sachs’ target price for Infosys?
Goldman Sachs retained its Neutral rating and a reported target price of ₹1,000, citing weak organic growth visibility and continued pressure on revenue.
4. Which brokerages remain positive on Infosys?
Nomura and Motilal Oswal retained Buy ratings with reported target prices of ₹1,300. UBS also maintained a Buy rating and was reported with a ₹1,415 target price in coverage published on October 26.
5. Is Infosys a buy, sell or hold after the guidance cut?
There is no single consensus. Some brokerages remain positive because of valuation and deal wins, while others are cautious about the pace of growth recovery. Investors should consider their risk tolerance, time horizon and independent financial assessment rather than relying on a single target price.
Looking Ahead
Infosys will need to demonstrate that its large contract wins can translate into revenue growth while it manages competitive pricing, wage costs and the demands of AI-driven productivity. The company’s unchanged margin guidance provides one point of stability, but the lower revenue forecast leaves investors looking for clearer evidence of a recovery.
The next key signals will be organic revenue growth, the pace of deal conversion and whether client spending improves. Until those indicators become more convincing, the gap between bullish and cautious brokerage views is likely to remain a central part of the Infosys investment debate.
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