Infosys (BSE/NSE) enters Monday’s session under heavy pressure after slashing its full-year revenue growth forecast to 1-2%, a sharp drop from the earlier 1.5-3% band. The IT giant’s US-listed ADRs ended Friday’s trading nearly 7% lower, signaling how the street is pricing in the guidance cut. The move marks the second consecutive quarter of reduced expectations, following a similar trim in Q1 where the upper end was lowered from 3.5% to 3%.
The numbers themselves disappointed. Q2 constant currency revenue growth clocked in at 1.2%, falling short of the 1.4% average from a CNBC-TV18 poll. Margins didn’t save the day either, with EBIT margins landing at 21% versus a 21.3% estimate. While the company held firm on its FY EBIT margin target of 20-22%, the revenue side is where the pain is concentrated. For context, Infosys shares closed flat on Friday at ₹1,153.8 on the NSE, but that’s before the weekend’s negative sentiment fully digests.
CFO Jayesh Sanghrajka pointed to intense competition and softer demand in retail and high-tech sectors as the culprits. “Our Q2 has been softer and our volume continues to remain softer,” he stated, noting that the firm is now cherry-picking deals to meet strict economic parameters. This selectivity is a double-edged sword: it protects margins in the long run but starves the top line in the short term. Management also warned of H2 margin pressure due to wage hikes, though they claim Project Maximus will offset these costs.
The broader context is grim. The stock is already down 30% year-to-date, reflecting a sector-wide struggle with AI-driven disruption and legacy client budgets. With guidance cut for the second straight quarter, investors are left questioning when the bottom is. Watch for how the NSE opening trade reacts to the ADR discount; a gap-down open is likely, testing support levels that haven't been probed since late last year.