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Infosys for Q1FY27 reported revenues of US$ 5,082 mn

ICICIdirect Research 24 Jul 2026 DISCLAIMER

News: Infosys for Q1FY27 reported revenues of US$ 5,082 mn, up 1% QoQ/ 2.4% YoY in CC terms including 1.1% contribution from acquisitions QoQ. Vertical wise, on YoY CC basis, growth was led by Lifesciences (8% of mix), Financial Services (28% of the mix), Hi-tech (8% of mix), Communication (12% of mix), ER&U (13% of mix) and Manufacturing (16% of mix) which grew by 24%, 2.4%, 2.4%, 1.3%, 1.3% and 1% while Others (2% of mix) and Retail (13% of mix) de-grew by 9.9% and 1.8%. Geography wise on a YoY CC basis, growth was led by North America (56% of the mix) and Europe (32% of the mix) which grew by 3.2% and 2.8% while India (3% of the mix) and RoW (9% of the mix) de-grew by 4.2% and 1.6%. EBIT margins at 21.1%, was up ~10 bps QoQ/ ~30 bps YoY with +70 bps tailwind from rupee depreciation, +20 bps from Project Maximus, +20 bps net benefit from amortisation of costs on intangibles incurred in Q4 offset by new acquisition impact in Q1, and +30 bps one-time cost benefit, offset by -50 bps from AI sales & marketing investments, -40 bps from the one-time revenue impact due to program termination by a large manufacturing European client and -20 bps from higher other expenses. PAT stood at ₹7,769 crore, down 8.6% QoQ/ up 12.2% YoY. Large deal TCV came at US$3.6 bn (61% being net new) vs. US$3.2 bn in the last quarter i.e., +12% QoQ/-4% YoY. Attrition stood at 13%, up ~40 bps QoQ.

View: Infosys reported a modest 1% QoQ CC growth aided by ~1.1% acquisition contribution, while underlying volumes remained weaker than expected and a client program termination impacted topline growth by ~50 bps. More importantly, the FY27 revenue growth guidance was cut to 1.5–3% CC from 1.5–3.5%, despite now incorporating ~1.7% contribution from acquisitions (Optimum Health & Stratus), implying a significantly weaker organic growth trajectory. Management cited softer volumes, higher AI-led productivity pass-throughs, increasing pricing competition, ~0.75–1% impact from higher offshoring and >1% drag from the large European manufacturing client. Deal wins remained healthy at US$3.6 bn with 61% net new, but conversion into incremental growth remains constrained by productivity-led revenue deflation and cautious discretionary spending. AI remains the key bright spot, with revenues reaching 8.2% of the mix from 5.5% in Q3FY26 and continuing to grow at strong double digits sequentially. Margins were resilient at 21.1% and FY27 guidance was retained at 20–22%, supported by Project Maximus, currency and lower onsite mix, though wage hikes (planned in Q3 and Q4), acquisitions and continued AI investments remain headwinds. Overall, strong AI traction and deal wins provide medium-term comfort, but the guidance downgrade despite contribution from acquisitions and weakening organic growth outlook reinforce near-term demand concerns. We maintain a cautious stance on the company.

Impact: Negative

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