BENGALURU: Infosys had a lacklustre Q2, with its shares falling 6% in early trade on the NYSE after it cut FY27 revenue growth guidance to 1%-2% in constant currency terms from 1.5%-3% earlier. This is the company’s weakest growth outlook in seven years, reflecting subdued volumes, pricing pressure and weakness in its mainstay market, North America, which declined 1.5% year on year.The slowdown was particularly sharp in high-tech and retail, which declined 17.3% and 7.7% year on year, respectively, in constant currency terms.Infosys CEO Salil Parekh said the weakness was driven by specific client situations rather than a broad-based slowdown across industries. “We have seen different client-specific situations in both retail and high-tech. This is not happening across all industries. We continue to see strong growth and discretionary spending in financial services, energy and utilities, and manufacturing,” he said.CFO Jayesh Sanghrajka said volumes remained subdued, while competitive intensity and clients’ higher productivity expectations had put pressure on pricing. Discretionary spending in retail and high-tech was also lower than anticipated, he said, adding that these factors had led to the guidance cut.Retail was additionally affected by a larger thirdparty component in the previous quarters, creating an unfavourable sequential comparison. While weakness in high-tech and retail was broadly similar across geographies, the impact was more pronounced in the US, Sanghrajka said.The company retained its operating margin guidance at 20%-22% for FY27.In dollar terms, Infosys’ revenue rose 1.2% sequentially and 1.3% year on year to $5.1 billion in the September quarter. In constant currency terms, revenue grew 1.2% sequentially and 1.5% year on year. AI was a bright spot, accounting for 10.5% of revenue and growing 29% sequentially, compared with 8.2% in the previous quarter, Parekh said.
