Infosys Ltd (INFY) Q2 FY27 Results Analysis: Record $5.2 Bn Deal TCV, Guidance Cut to 1-2% CC

Infosys Ltd's Q2 FY27 numbers came in mixed, with revenue of Rs. 49,244.00 Cr (+10.69% YoY) and PAT growth of +6.23% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

Q2 FY27 delivered stable 21.0% operating margin within the retained 20-22% band, record large-deal TCV of $5.2 Bn including a >$2 Bn mega deal, and AI revenue share rising to 10.5%. However, constant-currency growth of +1.5% YoY prompted a second consecutive guidance cut to 1%-2% CC, with Hi-Tech (-17.3% CC) and Retail (-7.7% CC) weak and PAT growth (+6.23%) trailing reported revenue growth. The $5.2 Bn TCV ramp into H2, falling attrition, and strong FCF conversion are the key watch items against stacked H2 headwinds (wage tranches, ~50 bps acquisition drag, European manufacturing ramp-down).

Key Investment Insights

Key Positives

• Large-deal TCV of $5.2 Bn (62% net new), including a mega deal of over $2 Bn — best single quarter in the disclosed trend
• AI revenue share rose to 10.5% of revenue from 8.2% QoQ (+29% sequential growth)
• Operating margin held at 21.0%, within the retained 20-22% guidance band, absorbing ~50 bps acquisition drag
• H1 CFO of Rs.18,958 Cr at 1.21x PAT; Q2 FCF of $928 Mn at 113.5% of net profit
• DSO improved to 64 days from 71 a year ago; trade receivables below March level despite higher revenue
• LTM attrition fell to 12.7% from 14.3% YoY; utilization ex-trainees rose to 85.4%
• Headcount added ~4,500 QoQ to 332,542 ahead of ramping the $5.2 Bn TCV quarter
• Interim dividend raised 13% YoY to Rs.26/share

Risk Factors

• FY27 CC revenue guidance cut for the second consecutive time, to 1%-2% from 1.5%-3.0%
• Hi-Tech revenue fell 17.3% CC YoY and Retail fell 7.7% CC YoY; North America declined 1.5% CC YoY
• PAT-to-owners growth of +6.23% YoY trailed reported revenue growth of +10.69% on a 125 bps higher effective tax rate and 13.65% lower other income
• Q2 FCF declined 8.1% YoY in Rs. (−15.7% in USD)
• Life Sciences margin fell to 15.22% from 18.65% YoY; All other segments' result fell 53.26% YoY
• US DOL PERM suspension (October 10, 2026) is an open overhang, though the company states it is not anticipated to have a material impact