Infosys Shares Fall on Lowered Revenue Guidance Despite Strong Deal Wins

Infosys (NSE:INFY) shares fell on Monday after the Indian IT services major lowered its annual revenue growth forecast, a move that overshadowed strong quarterly deal wins and solid profit growth. The company's stock traded down 1.5% to 1,137.0 rupees following the release of its second-quarter results on Friday.

Weaker Outlook Weighs on Shares

The primary driver of the negative market sentiment was Infosys's revised guidance for the current fiscal year. The company narrowed its constant-currency revenue growth forecast to a range of 1% to 2%, down from its previous projection of 1.5% to 3.0%.

This adjustment signals that management anticipates continued macroeconomic headwinds impacting client spending, even as other performance metrics remained strong. The company did, however, reaffirm its operating margin forecast for the year, holding it steady at 20% to 22%.

Strong Deal Wins and AI Growth in Q2

Despite the cautious outlook, Infosys reported a solid performance for the three months ended in September. Key results from the quarter include:

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• Revenue: $5.15 billion, an increase of 1.5% year-over-year in constant-currency terms.
• Operating Margin: Stable at 21%.
• Net Profit: Rose to 78.23 billion rupees from 73.64 billion rupees a year earlier.

The Bengaluru-based company demonstrated significant business momentum, securing large deals with a total contract value (TCV) of $5.2 billion. Notably, 62% of this TCV was from net new business. CEO Salil Parekh also highlighted growth in artificial intelligence, stating that AI-related services grew 29% sequentially and now account for 10.5% of total revenue.

Shareholder Returns

In a positive development for investors, Infosys announced an interim dividend of 26 rupees per share. This represents a 13% increase from the dividend paid in the same period a year ago, underscoring the company's continued commitment to returning capital to shareholders.