Oct 26 (Reuters) - Shares of India's Infosys fell 2.7% on Monday after the software exporter sharply cut its fiscal 2027 revenue growth forecast, underscoring challenges from AI-driven pricing pressure, tougher competition and sluggish demand in key markets.
The firm was the last of the top 5 to report earnings for the Indian IT sector. Earlier this month, peers TataConsultancy Services and HCLTech met revenue estimates with modest margin performance, but investors cheered the uptick in AI revenue.
The company cut its fiscal 2027 revenue growth forecast to 1%-2% from 1.5%-3%, while most analysts had expected it to trim only the upper end of the range to 2.5%.
"Peers are better placed than Infosys at this point, and the share movement is just reflecting that. Infosys has been underperforming from Q4FY26 results," LKP Securities analyst Anshul Jethi said.
AI competition and clients expanding their global capabilitycentres or offshore tech hubs directly, rather than engaging Infosys for IT services, are also hurting the company, he added.
Systematix analysts called it a "disappointing quarter", highlighting pricing pressure from heightened competition and client productivity demands on account of AI, and subdued tech spending among retail and high-tech clients.
Brokerage Motilal Oswal said weaker volumes, smaller-than-expected price increases, a shift toward offshore delivery and Infosys' decision to exit a large European manufacturing contract had weighed on growth.
TD Cowen said macroeconomic uncertainty, AI-led productivity demands, and heightened competition have hurt pricing and volumes, while seasonal weakness and client ramp-downs could weigh on second-half growth.
Analysts rate the stock "Buy" on average, with a median price target of 1,180 rupees, according to data compiled by LSEG.
Shares were last trading 1.5% lower at 1,136 rupees as of 10:53 a.m. IST. The Nifty IT index was down 0.2% while the benchmark Nifty 50 index was up 0.16%.
(Reporting by Sai Ishwarbharath B and Mridula Kumar in Bengaluru; Editing by Sherry Jacob-Phillips and Rashmi Aich)
