Infosys dividend, Q2 results preview: Profit, sales, deal wins, FY27 guidance, AI-led deflation

Infosys Ltd is set to report its quarterly results on Friday, with its board also considering a proposal on declaring interim dividend for FY27. Investors will keenly track FY27 revenue guidance by the second-largest IT firm, its order book and mega-deal renewals, AI-led deflation and margin outlook. The management commentary on demand will be keenly followed as the Bengaluru-based IT major prepares for a leadership transition.

To be sure, Q2FY27 was seen as a subdued quarter for Indian IT, with no meaningful improvement in demand and recovery pushed further out, putting FY27 on track to mark a fourth consecutive year of weak growth. Persistent macro uncertainty, elongated decision cycles, weak discretionary spending, geopolitical disruption and rising AI-led productivity pass-throughs was believed to have constrained growth. But the Q2 results of a few major IT firms eased those concerns, a bit.

Net profit, sales growth
For Q2, the consensus Bloomberg estimates for infosys' net profit, net sales and operating margin stand at Rs 7,904 crore, Rs 49,108 crore and 21.2 per cent, respectively.

Jefferies expects Infosys to report a pre-tax profit of 7,919.70 crore, up 7.5 per cent on year-on-year (YoY). Revenue is seen rising 10.5 per cent YoY to Rs 49,144 crore while Ebitda is seen climbing 12.2 per cent YoY to Rs 11,820 crore.

Emkay, which has a 'Buy' rating and a target price of Rs 1,300, expects Q2 net profit to rise 9 per cent YoY to Rs 8,026.70 crore, with sales increasing 10.9 per cent to Rs 49,323 crore.

"We expect 1.5 per cent QoQ dollar revenue growth after factoring in 50bps contribution from Optimum acquisition and 20bps cross-currency headwinds. EBIT margin is expected to expand by 50bps sequentially," Emkay Global said.

Kotak Institutional Equities expects Infosys' Q2 profit to rise 4.4 per cent YoY to Rs 7,689 crore, with organic CC revenue growth of 1.1 per cent. About 50 basis points of growth would come from the reversal of a headwind seen in the previous quarter, it said.

"The Optimum Healthcare acquisition will contribute 50 bps through a full-quarter consolidation. We expect stable margins. There are several moving parts, with a 50 bps headwind from the swing in provision for post-sales client support offset by the absence of the 50 bps revenue reversal headwind seen in the previous quarter. Benefits from rupee depreciation are likely to be offset by weaker revenue growth," Kotak said.

FY27 revenue, margin guidance

Emkay Global expects Infosys to lower its constant currency (CC) revenue growth guidance to 1.5-2.5 per cent year-on-year (YoY) from 1.5-3 per cent, taking the midpoint 25 basis points lower to 2 per cent, excluding the Versent acquisition. The brokerage expects the company to retain its EBIT margin guidance of 20-22 per cent.

Underlying organic growth remains modest, reflecting AI-led deflation and a weak demand environment, Kotak said.

Deal wins, mega-deal renewals

HDFC Institutional Equities expects Infosys' deal wins to be in the $2-3 billion range. Investors will track large-deal conversion and the renewal of mega-deals won over the past few years for cues on the sustainability of revenue growth.

The brokerage also flagged management commentary on demand outlook, furlough intensity, client budgets for 2027 and the deflationary impact of AI as key areas to watch.

Margins and AI-led deflation

Margin guidance is expected to remain stable, supported by currency tailwinds, staggered wage hikes and higher utilisation, HDFC Institutional Equities said. Investors will also look for clarity on how AI-led deflation could affect revenue growth. For Q2, this expects Infosys to report Q2 net profit of Rs 8,038 crore and sales of Rs 49,090 crore. It has a target price of Rs 1,250.

"The Optimum Healthcare acquisition will contribute 50 bps through a full-quarter consolidation. We expect stable margins. There are several moving parts, with a 50 bps headwind from the swing in provision for post-sales client support offset by the absence of the 50 bps revenue reversal headwind seen in the previous quarter. Benefits from rupee depreciation are likely to be offset by weaker revenue growth," Kotak said.

Demand outlook
Kotak Institutional Equities said it expects investors to focus on reason for revenue growth underperformance in FY27, renewal of mega-deals won in the last few years, split of growth impact between macro weakness and AI-led deflation, pace of
conversion of GenAI programs from pilots to scaled deployments and whether these represent netnew revenue or deflation of existing work and levers to defend margins amid elevated pricing
pressure.
Ahead of the results, Infosys has a Bloomberg consensus 12-month target price of Rs 1,186, indicating limited upside from Thursday's closing price of Rs 1,156.

Infosys will announce its Q2 results around 3:45 pm Indian Standard Time (IST). Its board will also consider declaring an interim dividend, if any. The leadership team will address a press conference at 4:30 pm IST, followed by a 60-minute conference call at 6 pm IST.