Infosys shares fall nearly 3% after Q1 results; analysts decode guidance cut and new CEO-designate

Shares of Infosys were trading lower in early trade on Friday, July 24, following the company's June quarter (Q1 FY27) results announcement.

The stock slipped as much as 2.7% to ₹1,019 on the NSE.

Infosys on Thursday reported a 12.2% year-on-year (YoY) rise in consolidated net profit to ₹7,769 crore for the June quarter, and tempered the upper end of its full-year revenue forecast to between 1.5% and 3% amid continued macroeconomic uncertainty.

India's second-largest IT services company saw revenue for Q1FY27 rise 14% to ₹48,211 crore.

Infosys also named company veteran Ashiss Kumar Dash as CEO-designate, with the leadership transition scheduled for April 1, 2027, after incumbent Salil Parekh completes his second term, marking the end of a nine-year tenure. Notably for Infosys, Parekh is its longest-serving CEO who is not one of the founders.

"We had a one-time revenue impact of a client decision during the quarter," Infosys CEO and MD Salil Parekh said.

AI services contributed 8.2% of Infosys’ Q1 revenue, with the company highlighting strong momentum and long-term client relevance driven by AI-led services.

Infosys said over 80,000 employees are using AI coding tools for client work and seeing strong traction across its six AI growth areas. The company is building AI capabilities, including process agents, data modernisation, and coding solutions, while planning to create a team of 6,000 frontier engineers over the next few years.

HSBC

HSBC said Infosys' decision to lower its FY27 revenue growth guidance was largely anticipated, but the magnitude of the cut was higher than consensus expectations.

It also highlighted the appointment of Ashiss Kumar Dash, an internal leader, as the company's CEO-designate, with effect from April 1, 2027. While HSBC noted that Infosys' valuations have become relatively inexpensive, it expects the near-term quarters to remain weak.

JPMorgan

JPMorgan noted the company's Q1 performance missed estimates on revenue, and management cut revenue guidance for the second consecutive quarter following a weak Q4.

The investment firm said growth momentum has taken multiple hits, including subdued demand, rising AI-led pricing deflation—sometimes even in mid-contract—along with contract-related challenges at Daimler and the termination of an Energy, Utilities, Resources and Services (EURS) contract.

It added that the revised organic growth guidance of -0.2% to 1.3% (1.5%-3.0% including acquisitions) points to a sharp slowdown, even as strong deal signings have yet to translate into revenue because of AI-driven pricing pressure.

Margins were largely in line with expectations, though the investment firm believes they will require continued management focus.

JPMorgan also said the appointment of company veteran Ashiss Kumar Dash, currently head of the EURS vertical, as CEO-designate should pave the way for a smoother leadership transition than seen in the past.

CITI

CITI described the first quarter as weak, with flattish organic sequential revenue growth, although margins and total contract value (TCV) remained healthy.

It noted that the revised guidance now incorporates the Optimum Health acquisition, while on an organic basis the midpoint of the company's guidance has been lowered by more than 170 basis points.

CITI also highlighted a 30% year-on-year increase in trailing 12-month TCV, around 1% year-on-year growth in headcount, and management's cautious commentary on the macro environment, discretionary spending and competitive intensity.

It also took note of the appointment of Ashiss Kumar Dash, Global Head of EURS, as CEO-designate and lowered its FY27 and FY28 EPS estimates by 1%-2% to factor in the acquisition.

CLSA

CLSA said the company's Q1 FY27 revenue growth and the reduction in FY27 guidance were disappointing, although EBIT margins exceeded expectations and the order book remained steady.

CLSA added that one of the key concerns around the lack of management aggression amid AI-led disruption was addressed to some extent through the appointment of Ashiss Kumar Dash as CEO-designate, who will take over as CEO from April 1, 2027.

Dash, who currently heads the EURS vertical, has been with Infosys for 31 years.

CLSA also noted that this marks the first time in Infosys' 45-year history that an internal, non-founder executive has been chosen to lead the company, reflecting its meritocratic culture.