Infosys stock slips: FY27 guidance triggers 2026 cuts

What pushed Infosys to a fresh 52-week low

Infosys (NYSE: INFY) fell to a new 12-month low after a fresh round of analyst revisions that followed the company’s latest outlook. BMO lowered its price target to $15 and kept a “market perform” stance, adding to the negative tone around near-term growth. MarketBeat data in the report showed a consensus rating of “Reduce” with a $14.22 consensus price target. Separate coverage notes also pointed to other firms trimming targets after the company’s preview and guidance. The immediate trigger for selling was not an earnings miss highlighted in the text, but the gap between management’s FY27 view and what the market had been expecting. The downgrade cycle came as investors reassessed how quickly large enterprise spending can recover. And it landed at a time when IT budgets globally are being scrutinised more closely.

Key broker calls and target-price resets

The BMO cut to $15 was one of the clearest data points flagged alongside the stock’s new low. Susquehanna was also cited as having reduced its price target after a “fiscal Q4 results preview,” with commentary that the sales forecast trailed Street estimates. TD Cowen was mentioned as another firm that lowered its price target for Infosys. In the broader India IT universe, JP Morgan said FY27 guidance had become the most important factor for the sector, the first time it framed guidance as the top driver in nearly eight years. JP Morgan also reduced target price-to-earnings multiples by 25% as it lowered medium-term growth assumptions. The same preview noted persistent headwinds from geopolitics and AI-related disruption in deal ramp-ups. Collectively, the revisions reinforced the idea that guidance, rather than quarterly delivery, is currently driving price action.

FY26 operating snapshot: scale, margins, cash flow

Operationally, Infosys reported FY26 revenue above US$10.0 billion, with about 3.1% constant-currency growth. The company also reported an adjusted operating margin of about 21%. Free cash flow was about US$1.7 billion, an important support metric in a soft demand environment. These figures indicate that profitability and cash generation remained intact even as growth moderated. The report also pointed to an OpenAI partnership designed to expand Infosys’ AI offerings. But the market reaction suggested investors were more focused on the growth trajectory implied by guidance than on strategic partnerships. That mix of steady execution and cautious forward commentary set the tone for subsequent target cuts.

The FY27 guidance that disappointed investors

Infosys guided for fiscal 2027 revenue growth of 1.5% to 3.5%, which the text said fell short of expectations and “spurred the market sell-off.” Management also indicated an operating margin expectation of 20% to 22% for FY27. Coverage linked the cautious view to subdued large-project spending and broader restraint in enterprise IT budgets. Analysts cited macro and geopolitical uncertainty as factors behind delayed decision-making and slower spending. The guidance issue was framed as sector-wide, not company-specific, as India’s leading IT service firms face similar conditions. Still, Infosys’ forecast became a focal point given its scale and benchmark status in the space. The result was a sentiment shift even though current-year metrics looked relatively stable.

March quarter details: revenue down, profit up

For the March quarter, Infosys reported revenue of ₹464.02 billion, down 1.3% sequentially. Despite the sequential revenue decline, net profit rose 27.6% quarter-on-quarter to ₹85.09 billion. Operating profit margin improved by 0.7 percentage points to 24.1%, helped by tighter operational cost control. The text pointed to lower spending on subcontractors as one driver of the margin improvement. It also noted that the prior period had exceptional costs, which boosted the quarter-on-quarter comparison. Even so, investor enthusiasm was described as dampened, with the stock pushed near its 52-week low. The market’s response highlights how forward growth guidance can outweigh backward-looking margin strength.

Sector context: AI adoption, slower growth, and cost focus

The article set Infosys in a wider context where Indian IT firms are navigating economic uncertainty alongside rapid adoption of AI. It noted that while revenue growth is slowing and forecasts are lower, firms are prioritising cost savings and margin improvement to protect profitability. There was also a warning embedded in analyst commentary about “AI compression,” described as AI-driven pricing pressure. Jefferies’ note, cited in the text, argued that near-term generative AI deals are small and can be margin-dilutive. Jefferies also said these AI deals are not yet offsetting softness in traditional services demand. At the same time, the report highlighted that many Indian IT players remain dependent on external platforms, limiting differentiation. This combination of demand restraint and evolving delivery models is shaping both guidance and valuation assumptions.

Valuations and peer comparisons cited in the report

Valuations were explicitly compared across a few large listed peers. Infosys was cited as trading at a P/E of around 17.5, described as cheaper than rivals. HCL Technologies was cited at about 20.0, while Tech Mahindra traded higher at roughly 27.9. On operational trends for the same period discussed, Tech Mahindra’s revenue rose 0.6% to ₹150.76 billion, with margin improvement linked to staff reductions. HCL Technologies saw a 3.3% revenue decline to ₹339.81 billion and a 2.2 percentage point drop in its core operating margin. The report described analyst views on Infosys as generally “Hold,” with caution due to low guidance and competitive pressures. These datapoints show a market weighing near-term growth visibility against cost-led margin defence.

Market impact: Nifty IT slide, FII selling, and target cuts

The broader tape was also negative for the sector. JP Morgan noted the Nifty IT index was down 25% in 2026 so far, compared with a 12% correction in the Nifty50. Elsewhere in the text, the Nifty IT index was said to have declined by 22.3% this year, reflecting persistent pressure. The report also said shares of Infosys, TCS, HCLTech, Wipro, and Tech Mahindra fell 13% to 17% in a month, wiping out a combined market capitalisation of around ₹4,850 billion. FIIs were reported to have pulled out nearly ₹110 billion from Indian IT stocks in the first half of February, pushing holdings to a four-year low. A separate segment described how brokerage caution ahead of earnings led to broad declines, with all 10 Nifty IT constituents trading in the red on one trading day. The combined effect is a sector where guidance and flows are amplifying volatility.

Key numbers and revisions at a glance

Why the guidance gap matters now

The central issue in the coverage is that the market is treating FY27 guidance as the key signal for demand health across Indian IT services. Multiple notes referenced subdued large-project spending and tighter enterprise budgets, suggesting the weakness is concentrated in discretionary programmes. Broker previews also pointed to disruption from AI as deals shift in scope and pricing, which can delay closures and slow ramp-ups. The combination can lower near-term visibility even when companies maintain strong cost controls and cash generation. That explains why margin expansion in the March quarter did not prevent the stock moving toward its 52-week low. It also explains why target prices were cut across the sector, not only for Infosys. For investors, the story is less about a single quarter and more about whether growth can re-accelerate within the guided band.

Conclusion

Infosys’ slide to a new 12-month low followed analyst target cuts and a FY27 revenue growth outlook of 1.5% to 3.5% that the coverage said fell short of expectations. Even with FY26 revenue above US$10 billion, steady margins, and an OpenAI partnership, the market reaction stayed anchored to demand visibility and deal momentum. The next major checkpoints, as broker previews emphasised, will be company guidance commentary across the sector and how FY27 assumptions evolve alongside AI-related pricing discussions and client budget behaviour.