By Sai Ishwarbharath B and Haripriya Suresh
BENGALURU, April 23 (Reuters) – Infosys forecast annual revenue growth below market expectations on Thursday, as macroeconomic uncertainty and newer AI tools push clients to reassess tech spending, sending U.S.-listed shares of India’s No.2 software services exporter down 6%.
Industry leader Tata Consultancy Services posted its first annual revenue decline in more than two decades, while rival HCLTech warned of weak annual growth, stoking fresh concerns over demand recovery in India’s $315 billion IT sector as clients delay discretionary spending and take longer to ramp up deals.
“The Street was waiting patiently for two years, and the overall narrative was fiscal 2027 growth would be better than fiscal 2026,” IT research firm EIIR Trend’s founder Pareekh Jain said, highlighting how Infosys and HCLTech did not deliver on that front.
“There is revenue deflation for companies stemming from AI as a lot of clients are pausing projects like SAP implementation and application modernisation midway because they think AI can do the work a lot more faster and cheaper,” Jain pointed out.
For fiscal 2027, Infosys forecast revenue growth between 1.5% and 3.5% in constant currency. Most analysts had expected it to be at least in the range of 2% to 4%.
WEAK OUTLOOK OVERSHADOWS FOURTH-QUARTER RESULTS
The outlook factors in weakness in the manufacturing vertical, particularly in Europe’s auto sector, Infosys CFO Jayesh Sanghrajka said.
The tepid outlook overshadowed better-than-expected results in the latest fourth quarter.
Consolidated sales rose 13.4% to 464.02 billion rupees ($4.93 billion), surpassing analysts’ average estimate of 460.30 billion rupees, according to data compiled by LSEG.
Net profit rose 20.87% to 85.01 billion rupees, topping the 74.65 billion rupees expected by analysts.
Large order bookings, or deals over $50 million, stood at $3.2 billion during the quarter, compared with $4.8 billion in the previous quarter and $2.6 billion in the year-ago period.
($1 = 94.1050 Indian rupees)
(Reporting by Sai Ishwarbharath B and Haripriya Suresh; Editing by Mrigank Dhaniwala, Dhanya Skariachan and Janane Venkatraman)
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