Infosys

Q1 FY27 (quarter ended June 2026): revenue $5,082m, up 2.4% YoY and 1.0% QoQ in constant currency; operating margin 21.1%; FY27 revenue guidance was revised to a narrow 1.5%-3.0% constant-currency band. In rupee terms, recent quarters were: Jun-25 revenue ₹42,279cr / PAT ₹6,924cr; Sep-25 ₹44,490cr / ₹7,375cr; Dec-25 ₹45,479cr / ₹6,666cr; Mar-26 ₹46,402cr / ₹8,509cr. PAT bounced around more than operating performance would suggest - Screener attributes part of this to a swinging effective tax rate (21%-30% across quarters), so EBITDA (steadily up, ₹9,943cr to ₹11,167cr) is the cleaner trend to watch, not the PAT line. AI-linked revenue rose from 5.5% to 8.2% of total revenue in one quarter - fast growth, but off a small base, so don't read too much into the percentage move yet. Net-new business made up 61% of large-deal wins, a healthy sign it isn't just renewing existing contracts. Q2 FY27 numbers (due Oct 22-23, 2026) were not yet out as of this report - not verified.

P/E sits around 14x (sources cluster between 13.2x and 14.4x; a 13.26x forward reading is in the same range), which is on the cheaper side of its own history. Why it's cheap: constant-currency growth has slowed to low single digits and the market is pricing in a real risk that AI compresses the traditional services-billing model. Whether that makes it cheap in an absolute sense is a separate question - a low-growth IT major trading at 14x earnings is arguably fairly priced for slow growth, not obviously a bargain.

Growth is weak and best described as margin-led, not volume-led: constant-currency revenue growth is running at 2-3% a year, with FY27 guidance capped at 1.5%-3.0%, while operating margin has stayed broadly stable near 21%. Whatever profit resilience shows up is coming from cost discipline rather than expanding volumes. AI-linked revenue growing from 5.5% to 8.2% of the book in one quarter looks dramatic in percentage terms, but it's off a small base (rule of thumb: tiny-base percentages overstate the story) - too early to call it a genuine new growth leg.

Financial risk is very low: borrowings of about ₹9,176cr against total assets of ₹154,288cr, essentially a net-cash business, with ROE near 32% and ROCE near 40% showing strong capital efficiency. Profits do convert well into underlying operating cash (EBITDA trend is steady and rising), though reported PAT has been lumpier than operations alone would explain, due to a swinging tax rate across quarters rather than a cash-conversion problem. The real concern here is business risk - demand and pricing pressure in IT services as AI changes how work is delivered - not balance-sheet risk.

Promoters hold 13.82% as of June 2026 (down modestly from 14.38% in March 2026), with zero shares pledged - no distress signal there. The Narayana Murthy family (Narayana Murthy, Sudha Murty, Rohan Murty, Akshata Murty and Ekagrah Rohan Murty) together hold about 4.06%. Notably, co-founders Nandan Nilekani and Sudha Murty chose not to tender shares in the ₹18,000cr buyback completed in December 2025 (100 million shares extinguished, 2.41% of pre-buyback equity) - a mild signal they're not looking to cash out. Institutional ownership is heavy and broad: FIIs hold 27.09%, DIIs 42.96% (including LIC and domestic mutual funds), public the remaining 13%. No single famous outside investor (e.g., no prominent individual guru-investor) features prominently on the register beyond the founder family and large institutions.