Q2 Net Profit Climbs to ₹7,823 Cr Amid Stiff Pricing Pressure
Indian information technology bellwether Infosys triggered sharp turbulence across international markets after its American Depository Receipts (ADRs) plummeted 6.58 percent to settle at $12.35 on the New York Stock Exchange, reacting to an unexpected cut in its annual revenue forecast for FY2026-27. Announcing its September quarter (Q2) financial scorecard after Indian market hours on Friday—where shares on the National Stock Exchange (NSE) closed virtually flat at ₹1,154—the Bengaluru-based software giant posted a resilient 6.2 percent year-on-year increase in consolidated net profit to ₹7,823 crore, while operational revenue climbed 10.7 percent to ₹49,244 crore compared to ₹44,490 crore in the corresponding quarter last year. However, the company's second growth guidance downgrade within the current fiscal year ignited widespread investor anxiety over demand sustainability and vendor pricing power, dragging down peer IT counters including Wipro, whose ADR fell 3.65 percent to close at $2.11, setting up a cautious domestic market open for Indian technology equities on Monday.
Second Guidance Downgrade Fuels Demand Concerns: North America Drags as Margins Hold at 20-22%
The primary catalyst behind the sell-off was Infosys trimming its full-year constant-currency revenue projection to a modest 1-2 percent, scaling back from its previous estimate of 1.5-3 percent. While the company retained its operating margin forecast within the 20-22 percent bracket, the guidance revision confirmed that discretionary corporate spending remains constrained across key global export markets. During the post-earnings investor call, management highlighted that corporate clients are demanding significantly higher operational productivity at discounted billing rates, creating structural pricing headwinds across conventional IT service lines. Chief Financial Officer Jayesh Sanghrajka noted that aggressive competitive bidding and persistent client cost-optimization mandates are directly compressing price realizations. Geographic performance underscored these pressures, with Infosys' primary North American revenue pool contracting 1.5 percent year-on-year in constant currency terms due to sluggish demand in retail and high-tech sectors, though resilient tech spending across energy, utilities, and financial services cushioned overall performance.
Generative AI Crosses 10% of Revenue Alongside $5.2 Billion Deal TCV
Despite near-term macroeconomic friction, the quarterly scorecard revealed strong underlying momentum in enterprise artificial intelligence adoption and institutional deal bookings. Revenue derived from AI-driven projects expanded 29 percent quarter-on-quarter, rising to account for 10.5 percent of Infosys' total top-line revenue as global enterprises shifted from preliminary proof-of-concept tests to large-scale production deployments. While management acknowledged that rapid AI revenue growth has not yet expanded quickly enough to fully counterbalance volume fatigue in legacy outsourcing contracts, long-term commercial visibility remained robust. The company secured a solid large-deal Total Contract Value (TCV) of $5.2 billion during the quarter, with 62 percent representing net-new business, anchored by two mega-agreements, including a milestone seven-year deal valued in excess of $2 billion with an international financial services conglomerate.
