Infosys will report its Q2FY27 results on Oct. 23, with analysts watching for modest growth amid AI-led deflation. Experts said, "Underlying organic growth remains modest, reflecting AI-led deflation and a weak demand environment." Investors will track revenue guidance, margins, and headcount changes as the firm navigates a tough market landscape.
Infosys Q2FY27 may show modest growth as AI deflation weighs; watch guidance, margins, headcount and $3B-plus deal wins on Oct. 23.
Infosys is expected to report organic constant-currency (CC) revenue growth of 1.1% sequentially in Q2FY27. Around 50 bps of this growth is expected to come from the reversal of a revenue headwind recorded in the previous quarter.
"Underlying organic growth remains modest, reflecting AI-led deflation and a weak demand environment," Kotak noted.
Axis Direct also expects Infosys' revenue to grow 1.4% QoQ, "led by deal ramp-up, inorganic contribution and vertical performance."
Here are five key things to watch out for in Infosys' Q2FY27 results.
1. FY27 revenue guidance
Infosys' FY27 revenue growth guidance will be closely watched for signs of a slowdown in demand.
DRChoksey Finserv expects "a deeper-than-expected trim to FY27 CC revenue guidance if September's demand softening in retail and communication extends into H2 and Q3 furloughs."
2. AI opportunity and deflation risk in focus
AI-led services revenue will be in focus, as artificial intelligence presents both an opportunity and a risk for IT firms. While AI-related services could support growth, AI-led deflation remains a key concern for the sector. AI-led deflation is the downward pressure on prices, billing rates, and operating margins as clients expect artificial intelligence automation to lower the cost of producing software and hence expect lower billing.
According to DRChoksey Finserv, AI-led services could provide some support to overall growth. These services accounted for 8.2% of Infosys' revenue in Q1FY27, and the brokerage expects further incremental growth from the company's Topaz engagements.
3. Project Maximus to support Infosys' margin improvement
Infosys' operating margins will be another key metric to watch.
Kotak expects EBIT margins to increase by 55 basis points (bps) quarter-on-quarter (QoQ), supported by the absence of wage hikes and productivity gains from Project Maximus. Project Maximus is a margin expansion and cost-optimisation program launched by Infosys in partnership with McKinsey.
PL Capital also expects Infosys' EBIT margin to improve by 40 bps QoQ, "as Project Maximus and some currency tailwinds [are] largely being set off by amortisation expenses & AI investments."
4. Infosys headcount and attrition in focus
Headcount and attrition will remain in focus amid AI-led restructuring and changes in workforce requirements across the IT sector.
In the previous quarter, Infosys' headcount declined by 532 employees to 3,28,062 from 3,28,594 in Q4FY26.
Meanwhile, the company's last-twelve-month (LTM) attrition rate rose to 13% in Q1FY27 from 12.6% in the previous quarter, an increase of 40 bps.
Investors will watch for any further changes in employee numbers and attrition.
5. Large deal conversion key to Infosys' growth outlook
The conversion of large deals into revenue will be another key factor to watch. Anand Rathi expects Infosys' total contract value (TCV) of deal wins to be in the range of $2.5 billion to $3.5 billion.
According to DRChoksey Finserv, if deal TCV falls below $3 billion, alongside continued uncertainty in Europe, the recovery in manufacturing and communication could take longer than expected.
Infosys is set to announce its Q2FY27 results on October 23. Keep following financialexpress.com for live coverage on Infosys results and management commentary. Other IT firms have reported mixed results for the September quarter. TCS and HCLTech reported growth in both revenue and profit, while Wipro's profit declined despite higher revenue.