Infosys Slashes Full-Year Guidance Amidst Q2 Weakness

Infosys Ltd. announced a revised revenue growth forecast for the full financial year, now expecting constant currency revenue growth between 1% and 2%. This represents a reduction from the previously projected 1.5% to 3%. The company's US-listed shares experienced a significant drop, closing nearly 7% lower on Friday evening following the release of the second-quarter results after market hours.

This marks the second consecutive quarter where Infosys has lowered its guidance. The first quarter saw a narrowing of the upper end of the guidance range. The company attributed the current guidance cut to a softer second quarter, with lower volumes and increased pricing pressure due to competitive market conditions. Infosys is prioritizing deals that meet its economic parameters.

While revenue growth guidance was reduced, Infosys maintained its Earnings Before Interest and Taxes (EBIT) margin guidance at 20% to 22%. However, management anticipates potential margin pressure in the second half of the financial year, attributed to upcoming wage hikes. These pressures are expected to be mitigated through initiatives like Project Maximus.